Asia
Nissan-Honda merger talks fail: A look at what went wrong
Late last year, Nissan offered embattled rival Honda a lifeline: a $60 billion tie-up that would have helped both Japanese carmakers compete against Chinese brands disrupting the auto industry.
Years of sales declines and management turmoil had left Nissan a weakened force, especially after it underestimated demand for hybrid vehicles in the US, its biggest market.
But merger talks broke down in little more than a month because of Nissan’s pride and lack of concern about its situation, as well as Honda’s sudden decision to revise the terms and propose that Nissan become a subsidiary, six people familiar with the matter told Reuters.
Nissan, Japan’s second-largest carmaker after Toyota until 2020, insisted on being treated almost as an equal in the talks despite its weak position, three of these people said.
Honda has pressed Nissan to make deeper cuts to its workforce and factory capacity, but Nissan is unwilling to consider politically sensitive factory closures, the three sources said. They said they were under the impression that Nissan thought it could recover on its own despite its mounting difficulties.
This intransigence, coupled with Honda management’s perception that Nissan was slow to make decisions, led to the undermining of a deal that would have created one of the world’s largest carmakers, the three people said.
Famed carmaker Nissan is now also facing the threat of US tariffs on vehicles made in Mexico, which accounts for more than a quarter of US sales. Both Nissan and Honda will announce their earnings on Thursday.
‘I think it’s a management problem,’ Julie Boote, an analyst at research firm Pelham Smithers Associates, said of the turmoil at Nissan. ‘They are completely overestimating their position, their brand value and their ability to turn the business around.’
Nissan and Honda declined to comment on specific aspects of the talks described by Reuters sources.
Nissan CEO Makoto Uchida visited his counterpart Toshihiro Mibe last week, saying he wanted to end talks after Honda made its subsidiary offer.
Both carmakers said they would provide an update this month.
Merger talks process
Nissan stunned investors in November by slashing its profit forecast by 70 percent due to deteriorating sales in China and the US. The company announced a turnaround plan that included cutting 9,000 jobs and reducing global capacity by a fifth, but some analysts called it ‘too little, too late’.
In December, Nissan and Honda announced plans to merge as a result of talks they have been in since March 2024, when they said they wanted to collaborate on technology.
But the merger talks quickly hit a wall over the calculation of the shareholding ratio for the combined company, two people said.
One of these people said Nissan CEO Uchida privately expressed scepticism about the future of the deal. Honda executives complained that Nissan’s decision-making process was too slow, four people said. A public update on the talks was originally set for the end of January, but was postponed until mid-February.
Honda executives thought Nissan’s turnaround strategy lacked detail and were disappointed to see a meagre reduction in factory capacity, the two sources said.
Reuters was unable to ascertain whether Honda had requested a specific number of layoffs or identified specific factories for capacity reduction.
One person said Nissan did not want to close factories because it would cause their value on paper to fall and hurt earnings.
The layoffs promised as part of Nissan’s turnaround plan amount to 7% of its global workforce. Honda has laid off more people in China in the past two years, one person said.
A person familiar with Nissan’s thinking said Honda seemed unwilling to compromise on its plans, implying that it did not see Nissan as an equal.
New partners
It is unclear what could bring the carmakers back to the table. They are likely to return to their initial agreement to work together on technology, the three people said.
If both companies agree to end talks, neither would be liable for the 100 billion yen ($650 million) break-up fee under the December memorandum of understanding.
Nissan is open to working with new partners, including Foxconn, the Taiwanese contract manufacturer that makes Apple’s iPhones, Reuters reported. Foxconn did not respond to a request for comment.
Foxconn Chairman Young Liu said on Wednesday that their aim was to co-operate with Nissan, not buy it.
The Taiwanese company’s electric vehicle business is led by former Nissan executive Jun Seki, who at one point was seen by an insider as a candidate to become the carmaker’s CEO.
Foxconn would be a more generous suitor than Honda because it needs a brand name in the auto industry and Nissan could be attractive, said Amir Anvarzadeh, strategist at Japanese equity advisory firm Asymmetric Advisors.
‘Whatever you think of their cars and balance sheet, at least the brand is still quite recognisable,’ Anvarzadeh said of Nissan.
The Japanese government has so far given little indication of how it views the breakdown of talks between Honda and Nissan or whether it would favour a Nissan acquisition by Foxconn, which is also the largest shareholder in consumer electronics company Sharp Corp.
Boote said the real question for Nissan now is what management will do.
‘They don’t have a realistic view of what’s going on in the auto industry and what really needs to happen at Nissan,’ he said.
Beijing said it had conducted law enforcement patrols in waters east of Taiwan in response to a decision by Japan and the Philippines to launch talks on maritime boundary delimitation.
According to a statement from the China Coast Guard, a flotilla led by the vessel Daishan carried out law enforcement patrols “in accordance with the law” on Monday.
China Coast Guard spokesperson Jiang Lue said the operation was “a necessary action” in response to Japan and the Philippines “unilaterally announcing the start of negotiations on maritime delimitation in waters east of China’s Taiwan Island.”
“Such an announcement seriously infringes upon China’s territorial sovereignty and its maritime rights and interests,” Jiang said.
“We urge Japan and the Philippines to immediately cease all illegal actions that violate China’s sovereignty and rights,” he added.
Jiang also said the coast guard would continue strengthening its control and management of the relevant waters and that China would take concrete measures to “resolutely safeguard territorial sovereignty and maritime rights and interests.”
The United States and most of its allies, including Japan and the Philippines, do not recognize Taiwan as an independent state and acknowledge it as part of China. The United Nations has also adopted resolutions reflecting this position. However, Washington continues to provide arms to Taiwan as part of its broader efforts to counter China and encourages its allies to do the same.
Following a summit in Tokyo between Japanese Prime Minister Sanae Takaichi and Philippine President Ferdinand Marcos Jr., the two countries said in a joint statement issued on Thursday that they had agreed to begin “formal negotiations” to delimit their exclusive economic zones (EEZs) and continental shelves.
Beijing condemned the planned talks as “completely illegal and invalid” and swiftly lodged formal diplomatic protests with both Tokyo and Manila.
Chinese Foreign Ministry spokesperson Mao Ning said on Friday: “The so-called delimitation negotiations are entirely illegal, invalid and void. They will have no impact whatsoever on China’s claims or on China’s exercise of its legitimate rights in the area east of Taiwan Island.”
The latest escalation comes at a time when relations between Beijing and both Tokyo and Manila are already strained. Japan and the Philippines are treaty allies of the United States, while China remains engaged in separate territorial disputes with Japan in the East China Sea and with the Philippines in the South China Sea.
As US attention and resources have increasingly shifted toward the war involving Iran, and as the White House has made the Western Hemisphere a strategic priority, Japan and the Philippines have stepped up diplomatic engagement in the region commonly referred to as the Indo-Pacific.
That effort has included building closer security and defence ties with other countries, prompting Beijing to accuse them of encouraging bloc confrontation in the region.
Japan and the Philippines do not share a maritime boundary. However, their seabed claims could overlap because both countries seek to extend their legal continental shelves beyond 200 nautical miles, equivalent to 370 kilometres or 230 miles.
The overlapping area lies east of Taiwan, southwest of Japan’s Ryukyu Islands and north of the Philippines’ Batanes Islands.
Yang Xiao, a researcher at the Chinese Academy of Social Sciences, China’s highest-ranking state-affiliated think tank, said Taiwan’s EEZ and continental shelf are part of the area under discussion.
“These are China’s rights and are not something that the two sides can negotiate among themselves,” Yang said.
In an interview published on Sunday by Yuyuan Tantian, a social media account affiliated with state broadcaster CCTV, before the China Coast Guard announced the patrols, Yang said Beijing would take “historic and unprecedented” countermeasures against Tokyo and Manila.
“Since they are negotiating in a three-party overlapping zone, we can also take further steps to advance our jurisdiction in the waters east of Taiwan,” Yang said.
“If the other side insists on reckless and destructive actions, we will inevitably introduce new countermeasures.”
Yang described the waters east of Taiwan as a vital maritime area for the island’s economic activities.
“If these waters are divided between Japan and the Philippines, that would clearly harm the interests of the people living on Taiwan Island,” he added.
As artificial intelligence reshapes industrial structures in Japan and South Korea, stock market rankings are being redrawn. SoftBank Group has overtaken Toyota Motor to become Japan’s most valuable listed company.
SoftBank shares have surged as the global artificial intelligence rally gathers momentum, lifting the technology conglomerate’s market capitalisation above that of Toyota for the first time in more than two decades.
The shift reflects a broader reordering of Japan’s equity market. Automakers, alongside banks, steelmakers, energy companies and other traditional heavy industries, are losing ground to chipmakers and companies linked to artificial intelligence.
SoftBank shares jumped 14% on Monday, reaching a new record high. The company’s market value climbed to 48 trillion yen, or $301 billion, making it the most valuable company listed on the Tokyo Stock Exchange.
Toyota had long held the top position, with a market capitalisation of approximately 45 trillion yen. The last time SoftBank surpassed Toyota was in March 2000, at the peak of the dot-com bubble.
SoftBank’s rapid rise has been driven by strong earnings performance and its substantial investment in ChatGPT developer OpenAI.
The Japanese company reported net profit of 1.82 trillion yen, or $11.4 billion, for the first three months of 2026, 3.5 times higher than in the same period a year earlier. The group is also increasing its investment in OpenAI, completing a $10 billion investment in April and committing to invest an additional $20 billion later this year. Total investment is expected to reach roughly $65 billion.
According to The Wall Street Journal, OpenAI plans to file for an initial public offering and aims to list in the United States as early as September. Some media reports suggest the company could seek to raise $60 billion through the offering, potentially valuing it at more than $1 trillion. Such a transaction could become the largest initial public offering in history.
Investors expect the IPO to significantly boost SoftBank’s investment gains. Those expectations have helped drive the technology group’s share price higher. SoftBank shares have risen about 127% since early April.
The company is also planning to invest up to 14 trillion yen in the construction of data centres in France.
Chinese President Xi Jinping met Serbian President Aleksandar Vucic in Beijing, where the two leaders discussed bilateral ties and oversaw the signing of multiple cooperation agreements. Xi also awarded Vucic the Friendship Medal of the People’s Republic of China.
The meeting between Xi Jinping and Aleksandar Vucic began with an official welcoming ceremony at the Great Hall of the People in Beijing.
The two leaders then proceeded to formal talks. Xi said China and Serbia had achieved “positive results” since jointly launching the construction of a “China-Serbia community with a shared future in the new era” in 2024.
Xi said the partnership had not only benefited the two peoples but had also set an example for international relations.
The Chinese president described relations between China and Serbia as an “iron friendship” based on deep historical ties and mutual trust.
Calling on both sides to strengthen exchanges, deepen practical cooperation and continue supporting each other on issues concerning their core interests, Xi also said the two countries should align their development strategies and advance cooperation under the Belt and Road Initiative. In this context, he pointed to transport, energy and infrastructure projects.
Xi also called for expanding cooperation in emerging sectors such as artificial intelligence, the digital economy, green energy and advanced manufacturing.
Aleksandar Vucic congratulated China on the start of implementation of its 15th Five-Year Plan. Vucic also expressed confidence in China’s future development under Xi Jinping’s leadership.
The Serbian president said Belgrade attached great importance to relations with China and firmly supported Beijing on issues concerning China’s core interests.
Vucic thanked Chinese companies for their contributions to Serbia’s economic development and infrastructure construction.
Saying the two countries had made notable progress since establishing their comprehensive strategic partnership, Vucic added that cooperation had expanded across numerous sectors.
The Serbian president also praised China’s role in international affairs, saying Beijing approached smaller countries on the basis of equality and respect and defended international law.
Following the talks, the two leaders witnessed the signing of more than 20 cooperation agreements covering politics, trade, science and technology, education, legal affairs and culture.
The two sides also issued joint statements on steadily advancing the construction of a China-Serbia community with a shared future in the new era and jointly supporting the implementation of four global initiatives.
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