It hasn't been a month since two Japanese automakers, Honda and Nissan, officially announced their merger plans, but it appears that it's already facing a major hurdle. According to reports coming from Japan,

The problem is there is no likely outcome that would leave both companies and their employees better off than they are today.

Honda executives recently shared insights into their rationale for the proposed merger with Nissan.During a media roundtable at CES 2025 in Las Vegas Honda stressed the urgency to address mounting competition from Chinese automakers,

The mooted Honda Nissan merger and the fallout from leadership change at Stellantis suggests the auto industry must brace for turmoil, where size is a survival necessity.

Honda and Nissan are weighing the creation of a joint holding company “amid the dramatic changes in the environment surrounding both companies and the automotive industry,” Honda said. Among the reasons for exploring a merger: Critically examining plants and jobs.

Nissan needs to triple its profits by 2026 to be eligible for a merger with Honda.At a joint press conference announcing the memorandum of understanding for the merger, Honda CEO Toshihiro Mibe made it clear,

Honda has announced an agreement to merge with Nissan in a deal worth a reported $54 billion. Mitsubishi, which has long been allied with Nissan, will decide by the end of January 2025 whether to join the venture, potentially increasing the total merger value to $58 billion.

While Honda does have the Prologue, that vehicle was part of a $5 billion joint venture with GM that only lasted through the development of two vehicles. The Prologue has been a surprise EV hit, selling over 33,000 in 2024 and outselling the larger gas-powered Honda Passport.

Honda and Nissan’s merger risks failure due to cultural clashes and misalignment. Find out why HMC and NSANY stocks are uncertain investments.

Honda is eager to ensure there's no foreign influence on its merger with Nissan, especially since Taiwan's Foxconn has been eyeing the ailing brand

Honda reportedly wants Nissan to buy out the share Renault has in it, before the two Japanese brands shack up together in 2026.