Honda Nissan Merger Update – Things Get Complicated – CleanTechnica

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For years, we have been predicting consolidation would take place in the auto industry as new companies focused on producing electric cars came along and put pressure on existing companies. Those newcomers have a tough row to hoe to scale up their operations to the point where economies of scale make it possible to turn a profit, but legacy automakers face hurdles of their own because they need to sell conventional cars in order to pay for the transition to electric vehicles. It’s hard to ride two horses at the same time. When Honda and Nissan announced a month ago that they intended to merge the two companies, we weren’t all that surprised.

Now that there has been some time to digest the merger idea, it appears there are a few hurdles that must be cleared by Honda and Nissan if they expect to make it to the altar. The biggest is that Honda wants Nissan to resolve its relationship with Renault before the deal can move forward. Nissan and Renault have an alliance dating back to 1999 that Mitsubishi joined in 2016. Citing a report by Kyodo News, Bloomberg says Honda has asked Nissan whether it would be able to buy out Renault’s 35.7% share in the company leftover from when the two were closely aligned under the leadership of Carlos Ghosn. At today’s prices, the value of the Renault shares is around  ¥557 billion yen ($3.6 billion).

Fear Of Foreign Influences

Honda reportedly is concerned that Nissan could fall under an undesirable foreign influence should Renault’s stake be acquired by a third party while negotiations to absorb Nissan are underway. Last year, there were rumors circulated that Hon Hai Precision Industry Co., the iPhone maker known as Foxconn, was interested in a partial or complete takeover of Nissan to utilize its manufacturing capacity and create a pathway for it to become an EV manufacturer in its own right. Seeing Nissan fall into the hands of a Taiwanese company would be unacceptable to the Japanese government. Honda and Nissan have said they plan to announce a framework for their deal by the end of this month and intend to create a separate holding company that would serve as a corporate home for both  businesses by August 2026.

Whether Nissan would have the funds to buy out Renault’s stake is questionable, Bloomberg says. Its market value has slumped to about ¥1.56 trillion, while its cash and cash equivalents were around ¥1.52 trillion as of the end of 2024. Nissan is struggling financially, which is one reason why a merger with Honda is appealing. In November, Nissan said it would dismiss 9,000 workers and cut a fifth of its manufacturing capacity after net income plummeted 94% in the first half of its fiscal year. Nissan now sees its operating income plunging to just ¥150 billion in the year ending in March, down 70% from its previous forecast. Management also lowered their revenue outlook by more than 9%, meaning they now expect virtually no growth for the year.

In light of the financial baggage that Nissan brings to the table, some have questioned what exactly it is that Honda is getting out of the deal. When Toshihiro Mibe, the CEO of Honda, was asked recently what the strategic benefits of the new partnership were, Mibe-san replied, “That’s a difficult one.” And what of Renault? It was not mentioned when the two companies announced they intended to merge. Afterward, in a brief follow up, Renault simply said the company would “consider all options based on the best interest of the Group and its stakeholders.” That is a pretty cryptic response from a company that has a sizable financial stake in the outcome.

 Tangled Webs Between Honda & Nissan In China

The second hurdle to the Honda-Nissan merger is that both companies have partnered with Chinese manufacturer Dongfeng Motor, which was Nissan’s original partner when it first wanted to enter the Chinese market. Dongfeng not only builds some Nissan models under contract, it is also involved in the development of cars, especially EVs. Honda also has a joint venture in China with Dongfeng, which involves EV development and manufacturing. Most recently, it started producing the Honda Ye series of cars, which are sold only in China.

Writing for Inside EVs, Kevin Williams said that Honda has been adamant that it wants to harmonize development costs between both lineups., Yet they have an entire brand in China they have spent a lot of time and money to develop, manufacture, and market that competes with other cars developed jointly by Dongeng and Nissan. At a Honda round table discussion at CES 2025, Williams asked what would become of the tables of relationships between Honda, Nissan, and Dongfeng.

“Dongfeng Nissan and Dongfeng Honda are two different companies. Of course, we know the situation…but actually, the discussions are between [only] Honda and Nissan. Sooner or later, we will have to talk about it, but so there’s no conclusion over that,” said Katsushi Inoue, Honda’s Global Head of Electrification Business Development. He added that Honda could make a shared announcement about the future of the relationship with Dongfeng soon, but had nothing to add at the moment.

From so many perspectives, this mash-up between Nissan and Honda feels so messy, Williams said. Honda has said it wants to simplify development and potentially share EV costs with Nissan, but how that will work is unclear. Honda already has three joint ventures or shared electric car development arrangements with Dongfeng, Sony, and General Motors that are all unrelated to each other. Dongfeng itself has a line of cars for budget-minded drivers called Venucia, which uses parts from the Nissan-Renault-Mitsubishi parts bin. At the moment, no one knows how this will all play out. In fact, even the senior executives at Honda may not know the answer. Perhaps Toshihiro Mibe is more correct than we realize when he says, “That’s a difficult one.”

From the perspective of those on the outside looking in, this looks a lot like chaos. Honda is a proud company with a long history of making high quality automobiles. It would be a shame to see it succumb to the turbulence of the EV transition. Maybe a year from now we will know whether it has successfully navigated today’s treacherous crosscurrents roiling the auto industry.