The proposed combination of Nissan and Honda, and potentially Mitsubishi, has some new life as news reports out of Japan indicate that Nissan’s board is prepared to ease Nissan CEO Makoto Uchida out the door after a dismal 2024 financial report and growing pressure to work with the larger automaker.
Uchida said at the time the two companies suspended the merger this month that the company balked at subordination of Nissan’s management to Honda’s. Nissan’s financial weakness, though, leaves it vulnerable without a significant partner besides Renault, which wants to sell off its remaining stake in Nissan.
According to Bloomberg News, Nissan directors are gauging interest in potential candidates to succeed Uchida, a 22-year company veteran who’s been CEO since late 2019 following the ouster and arrest of Carlos Ghosn.
Nissan plans to name Jeremie Papin, who was tapped in December to become chief financial officer, as Uchida’s replacement, Japanese business publication Diamond reported Thursday.
Uchida has lost confidence of the board. Just nine months ago, the CEO committed to guidance of a ¥380 billion ($2.5 billion) net profit for the fiscal year ending in March. That has deteriorated to a ¥80 billion ($536 million) net loss.
Uchida last December agreed to a deal in principle with Honda that would have the two companies operating independently under a new holding company that would go public in 2026. The tie-up was to take place after Nissan completed restructuring. The company is in process of reducing 9,000 jobs globally and reducing capacity. But Honda management does not think Uchida is going far enough, and negotiations between Nissan and Honda over technological sharing under the new structure hit major speedbumps as well.
The Japan News claims Honda wanted Nissan to ditch its e-Power hybrid system in favor of its own, more traditional self-charging hybrid powertrain.
Powertrain Clash Key Cause of Honda Nissan Collapse
Why A Merger Between Honda and Nissan Is Unlikely
Honda and Nissan executives said earlier this month when they announced the deal had foundered that they would continue a strategic partnership with a third Japanese peer, Mitsubishi Motors Corp., to collaborate on electric-vehicle batteries, software development and other areas where all three companies could save billions by combining efforts and investments.
Earlier this month Honda’s CEO, Toshiro Mibe, reportedly told Nissan's board and the Japanese government he would consider resuming full merger negotiations under the holding company model on condition that Uchida step down, according to reports from Reuters Tokyo Bureau.
Renault still holds a 36% stake in Nissan, with 17.3% held directly and an additional 18.7% placed in a French trust. The French automaker had planned to reduce its stake to 15% in 2024 but delayed because of the negotiations with Honda. Since the talks between the companies broke down, Foxconn, the Taiwanese electronics giant, has courted Nissan. U.S. private equity firm KKR has also kicked the tires on potential investment options to strengthen Nissan’s financial position in exchange for a percentage of the company. Renault would likely make out better selling its stake with more than one bidder involved.
Foxconn Chairman Young Liu has publicly stated that while purchasing shares in Nissan isn't the primary goal, the company would consider it if necessary for a collaboration. Bloomberg News reported KKR’s interest in Nissan.
Nissan Motor Co.’s credit is now rated as “junk” by all three major credit rating agencies, following a second downgrade in a matter of days.
“The downgrade reflects Nissan’s persistently low profitability, with a delayed recovery trajectory against our expectations,” Fitch analysts led by Satoru Aoyama wrote in a report Wednesday. “We expect profitability to remain pressured over the next one to two years.”
