Nissan-Honda merger proposal fizzled before discussions even started

According to a report from the Financial Times, the Japanese government have tried to propose a merger between Nissan Motor Co. and Honda Motor Co. The merger was proposed due to the government’s growing concern over the future of Nissan following the growing rift in the weakening Renault Nissan Alliance, as well as disruptions posed by electric and driverless cars. Unfortunately, the idea has since fizzled as both companies had immediately rejected the idea.

Concern for Japan’s once mighty car sector started when automotive, as a whole, started moving towards self-driving electric vehicles while Japan’s car manufacturers remained set on their path to create fuel efficient cars.

It is easy to see why the Japanese government has honed in on Nissan and Honda specifically. In Japan, Honda is the only car manufacturer left that still operates independently. Nissan, on the other hand, has a troubled three-way alliance with France’s Renault and smaller rival Mitsubishi Motors.

People familiar to the situation also stated that Nissan’s soured alliance with Renault since the arrest of Nissan’s former CEO, Carlos Ghosn, to the point of collapsing, has only further raised the government’s concern.

But the ambitious proposal quickly fizzled even before any discussions were started when both sides had immediately rejected the idea.

Honda officials have pushed back on the idea citing Nissan’s complicated capital structure with Renault as a huge reason. Nissan is equally opposed to the idea of a merger with Honda as the group is focussed on rebuilding its existing alliance and regrouping after the disaster that its previous CEO left behind.

Auto-industry executives also weighed in on their opinions regarding the idea of the merger pointing out that the direction of both companies is also vastly different.

For one, Honda’s unique engineering design for its cars would make it hard for the company to share parts with Nissan and its partners. For another, Honda also makes more profit from motorcycles than cars. This has allowed the company to weather through down-turns easier than Nissan.

That’s not to mention that Honda is also the world’s largest manufacturer of engines for products like private jets, lawnmowers and boat motors.

While Nissan is similar in size with Honda when it comes to the number of cars they sell each year, the former is also more focussed on pioneering electric vehicle technology. Case in point, the Nissan Leaf is the first mass produced electric vehicle before other manufacturers joined the bandwagon.

As it is, both companies are also pursuing different future strategies as well. Nissan and Renault have entered in a partnership with Waymo to develop autonomous transport services in Paris and Japan.

Honda on the other hand, like Toyota, is focussing its efforts on hydrogen-powered cars along with an investment in Cruise, General Motors’ unit for autonomous vehicles.

Safe to say, a forced Nissan-Honda merger would not have worked well. The automotive world has seen its fair share of disastrous mergers, the Daimler-Chrysler tie-up during the 90s.