Nissan and Honda bet their reputations on possible landmark merger

If there is one person who could have predicted Nissan’s current state, it would be its former CEO, the infamous Carlos Ghosn.

From 2001 to 2017, Ghosn served as the CEO of Nissan. During his time there, he implemented some of the changes that earned him the nickname “Le Cost Killer” during his time at Renault and gained a reputation for going against the grain, including defying Japanese corporate structure and etiquette. 

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While his tenure also brought about landmark products like the all-electric Nissan Leaf and the Nissan GT-R supercar; his tenure with the automaker, however, would end with his downfall — culminating in a puzzling escape from Japanese house arrest.

In more recent times, he has been more than open to talking about Nissan and its current situation. In an August 2024 interview with Automotive News, Ghosn alleged that his former employer’s joint venture with Honda is actually a “disguised takeover.” 

“I can’t imagine for one moment how it’s going to work between Honda and Nissan unless it’s a takeover, unless it’s a disguised takeover by Honda of Nissan and Mitsubishi with Honda in the driver’s seat,” Ghosn said. “It’s going to be a takeover, a disguised takeover.”

Nissan and Honda deepen ties, explore possible merger

At a news conference in Tokyo on December 23, the executive leaders of Honda  (HMC)  and Nissan  (NSANY)  announced that they plan to merge under a new holding company as it is to stay competitive in an ever-changing automotive landscape. 

During their joint press conference, Honda CEO Toshihiro Mibe noted that competitors in key markets such as Tesla  (TSLA)  and BYD  (BYDDY)  have surpassed the Japanese old guard in terms of electric vehicles and autonomous driving.

“The rise of Chinese automakers and new players has changed the car industry quite a lot,” Mibe said.

“We have the potential to be a world-class, leading company in new mobility. By 2030, we need the artillery to compete on the battlefield. So, we are starting today.”

The automakers aim to negotiate the merger terms for approximately six months, aiming to wrap up around June 2025 before setting up a holding company by August 2026, when both automakers would be delisted from stock exchanges and become subsidiaries under the new holding company.

Additionally, Mitsubishi Motors, which is partially owned by Nissan, will decide by the end of January if they want to join the “new company.”

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Honda CEO: This is not a Nissan bailout

The CEOs have confirmed that executives at Honda, whose market cap totals more than $40 billion, will be in charge of appointing this “new company’s” board and president.

The final share transfer ratio, which will be based on share prices and other factors, remains to be discussed. Additionally, neither Nissan nor Honda teased any name or revealed where this new company will be headquartered.

Though Honda’s CEO pitched the idea of Honda and Nissan merging as a meeting of Japan’s figurative automotive “dream team,” Mibe warned that merging together be a quick fix for any of their combined problems, noting that any results would start to manifest before the end of the decade, with much of the big payoffs coming after 2030.

Additionally, he made it clear that the merger is not a get-out-of-financial-hell-free card for Nissan.

“This is not a rescue of Nissan,” Mibe said. He added that Nissan getting its act together was a “prerequisite” for the merger.

At the same time, Nissan CEO Makoto Uchida recognized that major change was necessary for the company to survive, noting that the partnership would enable both Honda and Nissan to “be among the top class” of automakers.

“Without the courage to transform, we will be unable to continue,” Uchida said. “If we can enter discussions with speed, even against the many emerging players, we can become a winner.”

Related: Nissan, Honda may have a huge announcement on the way

Honda has what Nissan doesn’t 

If everything falls in line smoothly, we could see the biggest automotive linkup since Fiat Chrysler (FCA) and PSA (Peugeot) merged in 2021 to create Stellantis.  (STELLA)

Combined, Honda and Nissan predict that they will generate annual revenue of nearly $182 billion and operating profit exceeding $19.2 billion. In terms of cars, the two respective automakers specialize in key technologies and are proficient in specific segments. 

For instance, Honda has demonstrated through strong sales of its Accord, Civic and CR-V hybrids that it has experience in gas-electric powertrains and vehicles. Conversely, Nissan has experience making body-on-frame pickup trucks with models like the Hardbody, Frontier, and the Titan.

During their joint press conference, Honda CEO Toshihiro Mibe noted that their long-term goal is not to downsize, but to use what they have to encourage growth and scale. For instance, Mibe teased a potential future product for the U.S. market: a hybrid pickup truck using Honda hybrid engines and Nissan’s truck chassis.

“We aren’t thinking about just carving out, carving out, carving out and leaving only the good parts,” Mibe said. “We want to think about options that lead us to bigger scale.”

The Nissan Motor Company trades on OTC markets in the United States as NSANY and on the Tokyo Stock Exchange under the ticker number 7201.

The Honda Motor Company is listed on the New York Stock Exchange under the ticker HMC. 

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