The collapse of merger talks between Honda Motor Co. and Nissan Motor Co. has left Nissan facing an accelerating financial crisis that industry executives warn could ripple quickly into the U.S. car market, pushing up prices and narrowing consumer choice as Chinese electric-vehicle makers expand their global reach.
The proposed $60 billion tie-up, disclosed in late 2024, would have created the world's third-largest automaker and given Japan's second- and third-biggest carmakers a stronger foothold against fast-growing Chinese rivals such as BYD. Instead, disagreements over control and restructuring brought negotiations to an abrupt end, exposing the depth of Nissan's challenges at a time when global competition is intensifying.
Honda, whose market capitalization is nearly five times that of Nissan, pushed for a structure that would have made Nissan a subsidiary. Nissan rejected the proposal, arguing for an equal partnership despite mounting losses and shrinking sales volumes. Honda executives, according to people familiar with the talks, grew frustrated with what they viewed as Nissan's slow pace of decision-making and limited restructuring efforts.
Nissan's financial position has deteriorated sharply. For the fiscal year ended March 2025, the company reported a loss of $4.5 billion, its worst performance in years. The figures have heightened concerns voiced internally as early as last year, when a senior Nissan executive warned the automaker might have as little as 12 to 14 months to stabilize without drastic intervention.
Since taking the helm in April, Chief Executive Ivan Espinosa has announced sweeping cuts, including plans to shut seven of Nissan's 17 factories, reduce its workforce by 15% and slash vehicle platforms from 13 to seven. Development work on new models scheduled for launch after 2026 has been paused.
"This is not something that happened in the last couple of years," Espinosa told MotorTrend. "It's more of a fundamental problem that probably started back in 2015 when management thought this company could reach around eight million [annual global vehicle sales]. The reality today is we are running at around half that volume."
For U.S. consumers, Nissan's troubles intersect with rising trade pressures. The company estimates that tariffs could cost it about $3.1 billion annually, a burden that risks being passed on through higher sticker prices. Espinosa acknowledged the uncertainty, saying, "Are we going to pass on tariff increases to the customer? It's very early to say," while adding that Nissan aims to cut tariff-related costs by roughly 30% in the near term.
Nissan is now exploring alternative partnerships after the Honda deal collapsed. Potential collaborators include Taiwan's Foxconn and Western automakers such as Ford Motor Co. and Stellantis, with discussions reportedly centering on hybrid sport-utility vehicles using Nissan's e-Power technology. Still, Espinosa stressed that alliances cannot replace internal reforms. "We need self-help. We cannot rely on anybody," he said. "We are looking at partners that can bring more corporate value and support to Nissan in the long term."
Despite its losses, Nissan retains more than $15 billion in cash and committed credit lines, providing a cushion as restructuring unfolds. But analysts say the broader implications extend beyond one company. Japanese automakers have fallen behind Chinese manufacturers in electric-vehicle development, allowing firms such as BYD to scale rapidly across Asia, Europe and emerging markets.
