To meet the merger conditions with Honda (HMC.US), Nissan (NSANY.US) has initiated a plant closure and layoff plan.

As Honda Motor (HMC.US) prepares to take over troubled Nissan (NSANY.US), the latter is accelerating its business restructuring to meet the terms of the deal.

Nissan is reportedly to stop production of its AD compact van in November to cut excess production. A spokesperson for Nissan said the manufacturing division Nissan Shatai Co. had not yet made any decisions on layoffs, and denied an earlier report that hundreds of jobs would be lost once production of the compact van ceased.

Nissan Shatai produced 150,000 vehicles at its Tsukuba plant in Kanagawa prefecture in fiscal 2023, of which about 7,000 were AD compact vans. The NV200 compact van was also produced at the same plant. Nissan holds a 50% stake in Nissan Shatai.

Nissan has already announced thousands of job cuts and plans to slash a fifth of its capacity to reverse a 94% drop in net profit. In a near-bankruptcy situation, Nissan last year sought help from Honda, although the latter made clear that Nissan’s recovery was a precondition for any form of cooperation between the two carmakers.

According to a report on Tuesday, Nissan announced 9,000 job cuts at the end of last year, of which about 6,700 were production workers. The report said that about 1,000 employees in Thailand would be relocated or laid off by the fall, and about 6% of its North American workforce had applied for voluntary retirement.

Nissan declined to comment on the report.

Analysts say the historic deal between Nissan and Honda will effectively split Japanese carmakers into two groups, subjecting Nissan’s business to closer scrutiny. Last week, it was reported that Honda had asked Nissan whether it could acquire part of Renault’s (RNLSY.US) 35.7% stake to prevent foreign influence during negotiations.

Honda and Nissan are due to announce the framework of the negotiations later this month, with a plan to list an independent holding company in August 2026.