I have to say that when this news broke it was a total surprise. I didn’t feel like Nissan really needed to be taken over, I felt like they could come back by themselves. As I said on the Car Pro Show, I’ve seen many times one “hot” vehicle can bring a car company back to health. I believe from what I have seen that the all-new Nissan Murano may well be that savior.
Personally, I like Nissan as a car company, although I am not sure what its identity is. They got the early jump on electrics with the Leaf, but you can’t really say it has been a hit. The Ariya electric is a great EV, but like all electrics, sales have been disappointing. Nissan tried to be a player in the half-ton truck segment, but failed miserably with the Titan, and the Frontier doesn’t really compete with Tacoma, Ranger, or Colorado. Nissan has sort of made a name in the value segment, with most of its vehicles being lower priced than the competition, but that wasn’t enough.
This brings up the haunting question I cannot dismiss: What does Honda gain by taking Nissan into its portfolio? If adding Nissan would put them over Toyota in total volume, there is a case to be made for that. Looking at worldwide sales in 2023, the Honda, Nissan, Mitsubishi, and Renault combined sales were 7.5 million. That still puts the new proposed company behind Volkswagen, and far behind Toyota. It would have placed them just above Hyundai/Kia last year, but barely.
So, let’s be honest here. This is not a merger-it is a purchase essentially, or maybe even a takeover. Mergers suggest two companies that are equal combining efforts to make both companies better. That is not the case here. There is a chance Nissan could drag Honda down and distract them from what they do best. Honda has had great success with hybrids of late, and they can certainly help Nissan there, but what does Honda get back in return? This is reminiscent of the Daimler-Benz & Chrysler “merger” of 2006, which was never a merger. Daimler took over Chrysler completely, even moving headquarter to Stuttgart. The result was both companies becoming weaker, less competitive, and both suffered from declines in vehicle quality.
The Honda/Nissan proposed merger is expected to take place this coming June, with Honda dominating the top executive positions and holding a big advantage in the Board of Director seats. Honda says that Nissan must get its “house in order” by then, although nobody knows exactly what that means. Nissan is burning through cash every single day and have said they will cut 9,000 jobs worldwide. When you cut 9,000 jobs virtually overnight, there is just no way Nissan will stabilize by this summer. Will Honda pull out of the deal if Nissan doesn’t get their stuff together? Time will tell, but in deals like this, there is a point of no return where it is too late to back out. Honda must keep this in mind.
One also has to wonder how the marriage of Honda and Nissan would affect rivals Acura and Infiniti. Both car companies have momentum right now with new or updated products that are doing very well. You assume both luxury brands could operate under the new umbrella, but Nissan has said they would entertain Nissan and Infiniti dealerships being in the same dealership facility. To me, this is a horrible and desperate move. It is also unfair to the great Infiniti dealers that have built nice, upscale facilities to house the brand. Hopefully, if Honda completes the deal with Nissan, they will reverse this, if it is not too late. Do you really want to take your $110,000 Infiniti QX80 to a Nissan dealership for service? No offense to Nissan dealers but most do not cater to luxury vehicle consumers.
The burning question I posed earlier in this article, about what Honda actually gains, appears to be troubling to Honda CEO Toshihiro Mibe, as well. Mibe struggled mightily with the answer at a press conference at the end of December, even bringing chuckles from the press in attendance. Finally, clearly befuddled, the CEO said: “That’s a difficult one”. Yes, it is, sir. His response makes me wonder if perhaps he is not completely onboard with this decision, or if outside forces are pushing this takeover. I know for sure no automotive CEO goes into a press conference unprepared, and he had to know this question would be in the top two. What could those outside forces be?
It is possible the Honda Board is pushing the merger, in which case, the CEO would have no choice but to get on the bandwagon. That would explain the puzzling press conference. It is more likely, however, the Japanese government is pushing the takeover and possibly even funding it. Why would they do that? Simple: CHINA. Japan is extremely concerned about the success of China’s BYD and Nio, two car companies enjoying tremendous sales success with low-priced vehicles in China, especially electrics. China has succeeded in becoming the world’s largest exporter of cars, replacing Japan. The Japanese government will not risk Nissan going by the wayside. They are too big to fail, not unlike our own government bailing out Chrysler and General Motors in 2008.
If I am wrong about the Japanese government being involved financially in the proposed merger, then I put the odds of this happening at 50-50. I suspect the more Honda execs think about this, the less it will look attractive. That could also be the case with Nissan, it could be them that squashes the deal, not wanting to lose its identity. Nissan knows this deal would eventually eliminate the company known originally as Datsun. Leaving both car companies intact, long term, makes no sense, especially in America. The new company would essentially compete with itself given the current vehicle offerings from both Honda and Nissan. They could co-exist, much like Hyundai and Kia have, but it just seems unlikely.
If I were Nissan, I would do whatever it takes to get Carlos Ghosn, the former and very successful Nissan Chairman, to come out of the retirement Nissan forced him into. They persecuted him, imprisoned him, and embarrassed him. He was forced to flee Japan in a large box that was disguised as cargo. The numbers don’t lie-Nissan was a far better and more viable company under Ghosn’s leadership. He was a tough workaholic and maybe, just maybe, that is what the struggling automaker needs just now.
This is likely to get even more interesting as time goes on, so get your popcorn and sit back while this all unfolds.
Photo: Honda.
