Honda and Nissan are two of the most iconic automotive manufacturers in the world, both headquartered in greater Tokyo. They came together under threat of being overrun by Chinese competition. Their merger talks lasted 52 days.
Whether it came down to an actual clash of ideology, hubris, or Honda thinking they had the upper hand in the negotiations because instead of being joint partners, Honda proposed to Nissan that it should take a subsidiary status, which they obviously refused, only they will ever know.
Honda and Nissan came together under threat of being overrun by Chinese competition.
The software bloc they were both left out of
The ultimate fallback is they are working on software development in cars that won't be released until 2029. They are also getting taken to task by Toyota because their new Arene is already shipping in the RAV4, and they've set up their own Japanese software bloc with Subaru, Mazda, and Suzuki, leaving both Honda and Nissan out in the cold.
In one move, Honda derailed the entire negotiation by trying to push for a takeover instead of a true merger. Back in March 2024 they'd already signed an agreement to work together on EV software, and that was the plan. In December they signed a second one to merge as equals under a joint holding company, it fell apart in February, and what they signed at the end of August is basically the same agenda they set for themselves at the start. In total, it took them twenty-nine months to get back to where they began.
What normally happens in contract negotiations
If you take a step back and look at what normally happens in contract negotiations where two interested parties cannot come to agreement, it's around strategy, product, and pricing. But this entire thing fell apart just because they could not agree on who will make the decisions with the new governing body.
For 30 years I've been negotiating commercial agreements locally, regionally, and globally, and some of the most complex deals are the ones where you're dealing with companies not in the same industry coming from different countries and speaking different languages. Because on top of the commercial terms, you're dealing with language and culture. Two of the biggest competitors in the same country, speaking the same language, in the same industry, couldn't agree on one point, and gave up everything they could have built together. It's just baffling.
In the 18 months that followed
In the 18 months that followed, Honda posted net losses of $2.7 billion. It's the first annual net loss since 1957. Nissan had to cut 20,000 jobs and close seven of their 19 manufacturing plants. They lost sight of the goal line somewhere along the way.
It comes down to what should have been agreed before they started negotiating and ensuring nobody strayed from this. The four points I would have focused on would have been technology base, IP ownership, dispute resolution, and dissolution settlement.
This was a game of "the rice bowl is big enough for both of us to eat," to keep our competitors away from the table. Until they decided to break the bowl.