Honda and Nissan Mull Merger to Combat Industry Pressures

Japanese vehicle makers Honda and Nissan are discussing a possible merger, in a bid to share costs and help themselves compete in a fast-changing and increasingly competitive industry.

Thomas Stallkamp, an automotive consultant based in Michigan, was involved in the struggles of one of the biggest car company mergers: the 1998 merger of Chrysler and German company Daimler. Stallkamp spent years in senior roles at Chrysler and DaimlerChrysler. Chief among those problems is that sales have plummeted in China, the world’s largest vehicle market. Chinese buyers are moving much more quickly to electric and plug-in hybrid cars and trucks than most industry experts had expected.

A merger could help Honda and Nissan develop electric cars faster and at lower cost — in theory. But other companies have struggled to achieve such gains in practice, often because the priorities of companies working together often shift and diverge.Ford Motor and Volkswagen teamed up a few years ago to work on EVs and autonomous driving technology. But the companies shut down their self-driving car business and reaped few benefits from collaborating on EVs.

On the production side, Nissan has two vehicle assembly plants in the US and Honda has four. Each also has engine and transmission factories and engineering centres. They could in theory reap savings by combining their operations, closing some plants and locations and eliminating jobs. But that’s where the difficulties are likely to arise.

For more than two decades, Nissan was the junior partner in an alliance with Renault. The partnership saved Nissan from collapse and helped it become profitable, but neither company had the kind of long-term success that had been envisioned by Carlos Ghosn, who had led the alliance and served as CEO of both companies.Eventually, executives at Nissan chafed at being, in effect, controlled by Renault. In 2018, Ghosn was arrested and jailed in Japan on charges of financial wrongdoing.

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