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It’s the last issue of the year, which of course means it’s also one of the biggest new events of the year. OEMs love dropping news when nobody is around to cover it!
In This Issue
The Honda and Nissan Merger is Underway
Honda
It’s now being reported that the expected merger of Honda and Nissan is underway, now that the companies have signed a memorandum of understanding and have announced it to the media. In the driver’s seat of this new combined company, Honda appears to be the one tasked with running the shots.
Automotive News (among others) has the details. There’ll be a new holding company over both companies. Mitsubishi has until the end of January to decide if it’ll join. Both companies will be required to stabilize business before joining, as it’s not a bailout of Nissan.
Opinions on the internet initially indicate a lot of sympathy for Honda for having to save Nissan and run a combined company successfully.
Perhaps it’s cold of me to say, but if you are a Japanese automaker you have long benefitted from the protectionism of the Japanese government. Now the government is asking a favor, and you simply can’t refuse. The government has its fingers on the scale, and it will use that power when it deems it necessary.
There are always rumors swirling about Nissan going bankrupt. It’s the punching bag of the automotive press. By the end of Nissan’s fiscal year, however, the company is expected to sell 3.4 million units. Honda is only 400,000 units ahead at 3.8 million, per Automotive News’s reporting. That’s not all that many cars in the grand scheme of the galactic empire.
The point is Nissan was never going to go bankrupt because the Japanese government would step in. The government has long protected its automotive OEMs by helping keep out competition, and there’s no way that it’d let one of its OEMs fail. Honda is the second largest Japanese OEM, and Nissan is the third. There’s far too much pride to let either of them fail.
But that doesn’t mean that Honda is somehow being punished by having to save Nissan. Honda has benefitted from the government, and now the government (like any good mob boss) wants a favor. If you don’t want to do business by these rules, you don’t run a car company in Japan.
Getting everything sorted is going to be an expensive affair, and there’ll be not only synergies but redundancies as part of the new business. Aside from the synergy of both companies loving CVTs.
Nissan brings experience in body-on-frame that Honda doesn’t have. Adding some “real” pickup trucks and large SUVs to Honda’s lineup wouldn’t hurt. And while Honda is working hard on its own EVs — the EV Hub in Marysville is a prime example — Nissan has two of its in-house EVs on sale. Honda presently sells a badge-engineered GM EV (a very good one, though).
Honda has been doing hybrids for longer than a hot second, and Nissan can use that technology in North America. The electrification products Nissan sells in Europe simply aren’t designed to work on American roads and meet the expectations of American consumers. The last real hybrid Nissan sold — the Rogue — didn’t deliver enough of a fuel economy benefit to justify its price increase to consumers.
My prediction is that Mitsubishi will join this group. I’m surprised their hand hasn’t been forced yet, but it will be. The fact it hasn’t yet might be an indication that the government is willing to allow some OEM failure, but just not one of the big dogs.
Nissan has been working hard on solid state. Both Honda and Nissan will ultimately benefit from that in EV development. Additionally, consolidating both companies at the EV Hub in Ohio would give the newly joined company a ton of engineering and development talent in one place (which is desperately needed).
Infiniti is dead. But Infiniti was likely dead before this. Acura will reign supreme, though I’d have a hard time making an argument for its continued existence in this brave new world, even if there are some excellent products branded with an A on the hood.
Sporty cars will still exist, and the portfolio might even grow. Nissan has a rear-wheel drive sports car. Honda has a front-wheel drive one. They both serve a different type of buyer, but shared engineering talent wouldn’t hurt here. Also, Nissan is planning on an electrified GT-R to return as a flagship supercar by 2030, which I’d expect to continue to happen under this new combined company.
The losers here are the people made redundant with the new combined company. While I expect the Rogue and CR-V to continue alongside each other — they both bring in the money — there might not need to be as many people needed to work on both. Cars like the Altima likely go away in favor of just the Accord. There’ll also be some extra manufacturing capacity in North America than what is needed with this new world order.
We’ll have to wait and see on that, though. I’m not saying Honda and Nissan are evenly matched in this deal — I think that’s why Honda is set to control the big company — I do think Nissan brings some value to the table that Honda doesn’t have. Both companies need to be better with EVs, and globally the Chinese EV influence sphere is growing, so there is no better time than the present to get things figured out.
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The Future
It’s certainly been quite the year for many of you out there, as it has been for me. For the upcoming year, at least in regards to this newsletter, I’m planning on some growth and expansion. I’ve started a podcast that I’ll be spending more time with (it’s hard getting guests during the holidays), and I’ll fall into some real cadence with newsletter distribution.
Outside of the newsletter, I’m working on an electrification site, a value-focused site, a luxury-focused site, and a truck-focused site. I’ll have more details on many of those as the year progresses. I’m just one person, so rapid growth is quite difficult. But I’m working to get there.
Beyond that? Stay tuned. I’m trying to figure everything out and see what audiences gravitate towards. All I know is thank you for coming along for the ride.
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