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Nissan is in dire straits and another Japanese carmaker is coming to the rescue.
Forging an official bond through a memorandum of understanding in March, Honda and Nissan are now taking steps towards a ‘business integration’ — that means a new holding company led by Honda executives will likely sit above the two brands.
Mitsubishi, Nissan’s ongoing alliance partner, also expressed an interest in joining Japan’s nascent automotive giant. Nissan's other alliance partner Renault elected to keep distance from the Japanese arrangement.
Not everyone is so sure the new deal is a good one, including outspoken former Nissan Boss Carlos Ghosn. Investors have also cooled on their initial excitement, with Nissan stock dropping 7.8 per cent late last week.
Distinct from The Alliance, the new arrangement will see Nissan and Honda merge under a new, as-yet unnamed holding group. The deal is tipped to be finalised by August 2026 and the new company will be listed on the Tokyo Stock Exchange (TSE).
Mitsubishi’s involvement in the new company will be decided by January 2025.
This is a response to Nissan’s current position, with the company battling sales declines, shrinking profits and huge debts. Specifically, China is the main target, with Nissan’s sales in the country down 50 per cent last fiscal year. New, electrified and ‘software-defined’ products are desperately needed.
Banding together won’t see Nissan and Honda outsell Toyota, which delivered over 11 million vehicles last year. Still, with Honda’s 3.8 million unit and Nissan’s 3.4 million unit projections, the pair will be close. Add Mitsubishi’s circa-900,000 sales and that’s over 8.0 million.
Honda will have a controlling share in the new group, being Japan’s second-biggest carmaker and the larger company of the three. It also has more stable financials than Nissan.
In short, working together should see Honda and Nissan share vehicle platforms and technology investment, giving the two brands greater operational efficiency. The goal is to have a combined sales revenue exceeding 30 trillion yen (A$300 billion) and a healthy 10 per cent operating margin.
The change in arrangement will see Honda and Nissan working closely but will not preclude the brands from continuing relationships with the likes of General Motors and Renault, respectively.
In Ghosn's eyes, the deal stands to stem Nissan's losses, yet does not offer clear advantages in terms of technology, supply chain or platform. Neither company has a strong foot hold in China, for example, yet they compete fiercely in other markets such as the US and Europe.
“It doesn’t make sense ... the first thing you look at when you want to envision an alliance is complementarity between the two partners. When I look at Honda and Nissan, I see none,” Ghosn commented from Beirut, Lebanon.
Honda's engineering excellence lays mainly in combustion engines and it will forever be the bridesmaid in the hybrid game. The cutting edge Insight beat Toyota to market with a hybrid yet it failed to have the cultural impact the Prius did. Honda then didn't persevere with hybrids in passengers cars in the same way Toyota did.
The brand's electric cars have struggled, too. The Honda e ended up being a quirky curio, while the North American-market Prologue and (critically panned) European market e:Ny1 haven't blown the competition away.
Nissan was, on the other hand, early to the electric car game with the Leaf yet did not progress the technology as fast as new Chinese carmakers have since. The Ariya is its lone electric car though an all-new Leaf is coming in 2025 or 2026.
Game-changing solid state batteries are also in Nissan and Honda's future arsenals, which could turn the game around in the eventual merged company's favour.
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