How Nissan lost its status as Honda's equal

Japan's Nissan is open to working with new partners, including technology firms, after merger talks with crosstown rival Honda foundered, people familiar with the carmaker's thinking have said.

The pair were on course to create the world's fourth-biggest carmaker with an annual production of nearly seven million vehicles, just behind compatriot Toyota , Germany's Volkswagen and South Korea duo Hyundai and Kia, according to 2024 sales data.

Nissan backed out after Honda proposed making its struggling peer a subsidiary, another person said.

Nissan suffered a bruising sales slump in the US and China — two of its biggest markets — and last year responded with a turnaround plan involving job cuts and capacity reduction.

Tumbling profit has tightened liquidity, constraining electrification efforts necessary to fend off competition from BYD and other Chinese rivals which have upended the global auto market with cheap electric vehicles.

Nissan has been burning rather than generating cash since the financial year that ended in March 2024 due to heavy capital spending and shrinking profit. It also has about 1 trillion yen (R121,266,024,460) of bonds maturing in the next two years, or about 43% of its total outstanding bonds, LSEG data showed.

Nissan has been hit harder than others by the EV shift. It never fully recovered from the crisis sparked by the 2018 removal and arrest of former chair Carlos Ghosn.

Its market capitalisation is now five times smaller than that of Honda, which is about 7.6 trillion yen. A decade ago, the pair were both worth about 4.6 trillion yen (R557,024,580,000).

Nissan's share price has fallen nearly 30% over the past 12 months. Last year, it fell below 400 yen — the price French partner Renault valued the stock at to increase its stake in the Japanese carmaker in 2002.

The price recovered in December after Nissan and Honda announced tie-up talks and was at 443 yen (R54) on Monday.