Nissan’s former CEO on Nissan-Honda Merger: A Bold Gamble Amid Industry Challenges

Speculation about a potential merger between Japanese automakers Nissan and Honda has stirred debate within the automotive industry. On Tuesday, Japanese media reported that the two companies were engaged in merger negotiations, a move seen as a strategy to pool resources and bolster their competitiveness in the rapidly evolving electric vehicle (EV) market, dominated by Tesla and Chinese automakers.

If realized, a Nissan-Honda merger would create the world’s third-largest car company by volume, uniting Japan’s second and third-largest automakers. Despite the scale of such a deal, Carlos Ghosn, Nissan’s former CEO, expressed skepticism, describing the potential merger as a “desperate move” by Nissan.

While both companies stated last week that they were exploring “various possibilities for future collaboration,” they emphasized that no final decisions had been made. Ghosn suggested that Nissan’s decision to pursue such talks indicated a state of “panic” within the company. He further argued that the merger lacked practical synergy, citing significant overlaps in their markets, products, and brand positioning.

“The two companies share very similar markets and products, leaving little room for complementarity,” Ghosn remarked. He also implied that Japan’s Ministry of Economy, Trade, and Industry might be playing a role in driving the discussions, seeking to align Nissan’s short-term challenges with Honda’s long-term vision.

The timing of the merger talks underscores Nissan’s precarious position. The automaker has been grappling with declining profits and a 20.7% drop in its stock price this year. Last month, Nissan announced global job cuts totaling 9,000 positions to reduce costs. Meanwhile, the company faces mounting pressure from Chinese EV makers, such as BYD, which dominate markets like Southeast Asia and Latin America. Data from ABI Research revealed that Chinese manufacturers accounted for 70% of Thailand’s EV market and 88% of Brazil’s during the first quarter of this year.

Once a trailblazer in the EV space with the launch of the Leaf in 2010—the world’s first mass-market electric vehicle—Nissan has since lost its leadership position. The company has struggled to modernize its lineup, offering neither hybrid nor plug-in options in the U.S. market. Andy Palmer, Nissan’s former chief operating officer, attributed these setbacks to poor management, stating in November that the company’s product portfolio lacked depth and competitiveness.

Ghosn, who oversaw Nissan during its initial EV success, has also faced his own controversies. Arrested in Japan in 2018 on charges of financial misconduct, he spent over 100 days in detention before fleeing to Lebanon in 2019. He has consistently maintained his innocence and recently filed a billion-dollar lawsuit against Nissan in Lebanon, alleging damage to his reputation and finances.

As Nissan navigates falling sales and intensifying competition, a merger with Honda represents both a significant opportunity and a considerable risk. Whether this potential partnership will address Nissan’s challenges or exacerbate them remains to be seen.

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