Japanese Government attempted Honda-Nissan merger

KUALA LUMPUR: The officials of the Japanese government has attempted to merge Nissan Motor Co. and Honda Motor Co. into a single unit as they are scared that the Nissan-Renault-Mitsubishi Alliance could fall and abandon Nissan. However, the Financial Times reported that the idea got flopped as the brands have rejected the proposal.

Due to the intensified competition in the global auto sector and the shift towards eclectic vehicles, the idea of merging Honda and Nissan arose. The idea came from the advisers to Shinzo Abe, Prime Minister. They fear that Japan’s car-manufacturing will lose its edge due to great competition.

The self-supporting destiny of Honda, which is the third-largest carmaker of the country has come under critical analysis as stabilization has accelerated elsewhere. Honda flaunts annual sales of 4.8m vehicles in Japan. Having said that, the idea of merging got canceled even before starting because both the companies declined the idea as they are already buried in the outbreak of COVID-19.

Due to the rising demands of self-driving electric cars, brands get pressurized and tend to bulk up via mergers way before pandemic came affected the industry. A former Nissan executive said, “A Nissan-Honda merger would only make sense to people who do not understand the car industry.”

Honda officials pointed that Nissan has a complex structure with Renault, hence they have pushed back the proposal. In addition to that, Nissan’s opinion was equally against the idea as they want to first work on their existing alliance. Before reaching the board of the brands, the idea of merging was instantly evaporated.

One of the main obstacles is that Honda boasts a unique engineering design, which can be a task when it comes to the sharing of common parts and platforms with Nissan. Additionally, if we exclude those then there’s no point of an alliance as they will not be able to cut the cost savings. Even if both the companies are pretty similar in size, but, Honda is able to churn out more profit from its motorcycles.

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