Former Nissan CEO Carlos Ghosn has raised concerns that Nissan would be severely impacted by a potential merger with Honda, predicting a “cost-cutting carnage” that could hurt the company.
Ghosn, who led Nissan for 19 years, emphasized that Honda would likely dominate the merged entity due to their lack of complementary strengths. He argued that any synergies would primarily come from eliminating redundancies in technology and production, with Nissan bearing the brunt of cost reductions.
The potential merger between automakers has gained considerable attention, with both companies confirming discussions earlier this week. However, under current proposals, a holding company would oversee both brands, with Honda—valued at four times the market cap of Nissan—likely nominating the majority of board members. Additionally, Mitsubishi, Nissan’s strategic partner, is also in discussions about joining the group.
If finalized, the combined entity could create a $54 billion automaker, making it the third-largest in the world by vehicle sales, behind Toyota and Volkswagen. This would mark a major consolidation in the automotive sector, driven by the high costs of developing EVs and autonomous driving technologies.
Both companies have touted the benefits of increased scale, such as shared resources to compete in the EV transition and long-term operating profit projections of 3 trillion yen ($19.1 billion). However, Nissan is also in the midst of a restructuring plan, which includes cutting production by 20% and eliminating 9,000 jobs.
Ghosn questioned the success of Nissan’s turnaround, suggesting that the company was “in panic mode” and looking for a way out. He expressed skepticism about the merger’s ability to succeed without effective integration. Kei Okamura, Senior Vice President at Neuberger Berman, echoed this concern, stressing that successful post-merger integration of people, assets, and culture is crucial to making the deal work.
The future of the merger remains uncertain, with both Nissan and Honda keeping details under wraps. The deal’s success will largely depend on how both companies manage their integration and restructure to meet the challenges of the evolving automotive market.
