Honda and Nissan have been discussing a partnership – and potentially a merger - for several weeks now, but the talks have bogged down over substantial differences, according to Japanese daily Asahi Shimbun.
Citing several sources, it reports that the boards of directors of both automakers are planning to meet to formalize the end of talks regarding a merger.
Honda executives are said to be frustrated by Nissan's slow progress, including on its restructuring plan to cut 9,000 jobs and reduce production by 20 percent. Honda has also proposed greater control over decisions at Nissan, or even making it a subsidiary. Initial reports when the partnership talks were announced indicated that Nissan wanted to retain its independence.
The Financial Times reported that Nissan's poor recent financial performance has caused its market capitalization to fall to one-fifth of Honda's, changing the balance of power in the negotiations.
The merger, if it were to go ahead, would be worth an estimated $58 billion and would create the world's fourth-largest automaker.
As for Mitsubishi, 34 percent of which is owned by Nissan, it has already indicated it was not going to join a merged company, as it feared losing its autonomy due to its smaller size compared to the two auto giants. It has also signaled that it wants to continue working with Nissan, however.
Even if the merger between Honda and Nissan falls through, as looks likely, the two manufacturers remain open to further collaborations. The companies are already working together on electric vehicle and software development, and Mitsubishi joined the partnership last summer.
In an increasingly competitive industry, partnerships are not only inevitable, they're necessary to reduce operating costs. It will be interesting to see what kind of deals might emerge if the planned merger doesn't go ahead.