Honda Motor (HMC) could jump-start talks over a deal with fellow Japanese carmaker Nissan but only if its chief executive Makoto Uchida steps down.
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A deal to create the world’s fourth-biggest automaker, which would be valued at $60 billion, broke down last week but according to a Financial Times report discussions could be revved up again if Nissan had a boss “who can more effectively manage internal opposition.” The news did little to help the HMC share price which was down over 2% in pre-market trading.
Relationship Soured Over Subsidiary Plans
The FT reported that Nissan’s Uchida had been a strong supporter of a deal but his relationship with Honda chief executive Toshihiro Mibe had become strained due to frustration over the speed of “Nissan’s restructuring and the depth of its financial troubles.” The talks stalled after Honda wanted Nissan to become a fully owned subsidiary with the two firms on an “equal footing.” However, becoming a subsidiary did not go down well with much of Nissan’s management. That’s because the original thrust of the deal had been to set up a holding company by August 2026 and for it to be listed on the Tokyo Stock Exchange.
Pressure Keeps Rising on Uchida
The carmakers were exploring a potential merger mainly to combat what they see as the threat from Chinese electric vehicle makers in both domestic and U.S. markets and to accelerate technological development. These factors have hit Nissan badly in terms of faltering sales. Uchida reportedly intends to stay until 2026 to help lead Nissan’s turnaround plan which includes shedding 9,000 jobs and cutting global manufacturing capacity by 20%. However, the FT report could pile pressure on him to go sooner rather than later.
Indeed, the FT said that Nissan’s board of directors have already started informal discussions over the timing of Uchida’s departure. Pressure could also come from French carmaker Renault which owns 36% of Nissan, including 18.7% through a French trust.
Is HMC a Good Stock to Buy?
On TipRanks, HMC has 1 Buy rating.
