TOKYO, Feb 12 (Reuters) – Nissan was deep in trouble late last year when rival Honda offered a lifeline: a $60 billion tie-up that would help both Japanese automakers compete against the Chinese brands upending the automotive industry.
Years of faltering sales and management turmoil had left Nissan a diminished force, especially after it underestimated demands for hybrid in the U.S., its top market.
But the merger talks unraveled in a little more than a month due to Nissan’s pride and insufficient alarm about its predicament, as well as Honda’s abrupt decision to revise the terms and propose that Nissan become a subsidiary, according to six people familiar with the matter.
Nissan, which for years until 2020 was Japan’s second-largest automaker behind Toyota, insisted on receiving near-equal treatment in the talks despite its weaker position, three of the people said.
Honda pressured Nissan to make deeper cuts to its workforce and factory capacity, but Nissan was unwilling to consider politically sensitive factory closures, three of the sources said. They said they were left with the impression Nissan felt it could recover on its own, despite its mounting difficulties.
That intransigence, combined with what Honda management saw as Nissan’s slow decision-making, helped torpedo a deal that would have created one of the world’s largest automakers, three people said.
This account of the forces that scuttled the mega merger features previously unreported information, including details about factories Nissan wanted to keep open, its resistance to Honda’s pressure for deeper cuts, and the reaction inside Nissan to some of Honda’s demands. The story is based on Reuters interviews with more than a dozen people, all of whom spoke on the condition of anonymity because of the topic’s sensitivity.