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.

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, Nissan, and Renault's merger may take on a new direction, per Bloomberg. According to the outlet, Honda is worried that Renault, which owns about 35 percent of Nissan, may be bought up by a third party while the deeply complex merger works its way toward completion.

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.

To hit this target, Nissan will need to rake in approximately 400 billion yen in fiscal 2026—roughly $2.6 billion at current exchange rates. That’s a tall order, especially considering Nissan’s operating profits plummeted by 90.

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