Transcription
Nissan and Honda were about to join forces to become the third largest car company in the world, but then they didn't. And now they might or maybe not. What's going on?
We're going to get to the bottom of the most confusing car news of the year so far. This is a Donut News special report. I'm Nolan Sykes.
All this started when Nissan announced they had 12 months to live back in December. Nissan's been treading water since around 2018 when their global sales started falling off around the world. Ever wonder why the GTR lasted for nearly 20 years or why the new Z shares so many elements with the old 370? It's because Nissan hasn't had a lot of extra cash to play with for some time now.
2018 is also the year the Japanese government put out an arrest warrant for then Nissan CEO Carlos Ghosn. Ghosn was wanted for financial misconduct and misreporting his income. But you might know him as the guy who escaped Japan in a box. After that news dropped, Nissan began to spiral. Within a year, the company's stock plunged even lower than it had during the 1990s financial crisis. And it's only gotten worse since. With the brand's terrible reputation for unreliable CVT transmissions and basically only being bought by people who couldn't get their credit approved for anything else, you have a car maker who is nearing its demise.
To give Nissan some credit, it's not like they've spent the last 15 years sitting on their hands like I do before making sin. They were pretty early to the EV game with the Leaf back in 2010. Unfortunately, it looked like that and failed to take any meaningful market share from the only other name in the game at the time, Tesla. Nissan took another swing at EVs with the Arya, which, full disclosure, we have done ads for, and it didn't quite hit either despite being a decent car. It seems like in recent years, every time Nissan tries something new, their budget limits them and they can't quite nail it. Been there, man.
It's a hard time to be a Nissan fan because we know the heights this company is capable of. So many of us in this scene are in it because we remember one of the many badass Nissan that helped shape their legacy. And seeing them not only struggle, but completely fail to live up to that legacy kills me. I don't know what I'm doing. I don't know where I'm going. And it's not just a question of being a fanboy and not digging what the company's putting out. The company won't last another year, remember?
So, that leads us back to the merger, which has been in the works for a lot longer than you might realize. Back in March of 2024, Nissan and Honda started dating, or at least hanging out a lot. They're in a situationship. They entered into a feasibility study, a little "I'll show you mine if you show me yours" kind of agreement. Basically, they would try to see what it would look like if the two companies got together and developed things like EV drivetrains and software together. Could it be done?
On the surface, this is pretty normal. Car companies do this all the time to save money, like Toyota and Subaru, or BMW and Toyota, or BMW and Coldplay. Fast forward to August and that feasibility study has gone quite well. Honda and Nissan take things to the next level. They're not quite moving in yet, but Honda has a toothbrush at Nissan's house. The two companies sign a memorandum of understanding, a non-legally binding agreement to quote "deepen the framework of the strategic partnership." This is what a love letter from a man who writes LinkedIn newsletters would sound like. In simpler terms, Honda saw a lot in Nissan and vice versa. In thisouou, both parties agreed that they want to seriously pursue EV development and SUVs or softwaredriven vehicles.
From Honda's perspective, this makes a lot of sense. Even though they weren't hits, the Leaf and Arya at least showed that Nissan had the chops to deliver competent EVs to market. Honda was already collaborating with Chevy for the Prologue SUV. So, imagine these two JDM titans coming together to make an all-Japanese EV for the masses. Now, you might call me a but I could see that being pretty cool. Stand by that.
But I suspect there's another reason for the stallions. Yes, Honda wanted to see if Nissan's EV program was up to snuff. But remember, Honda also watches the news. They've also seen Nissan's sales fall off, and they've also seen their market share take a hit from Chinese competition. So, what if Honda is plotting to take over Nissan this whole time? It's not that crazy a theory.
For all their faults, Nissan does have a few assets Honda would absolutely love to get their hands on. First is Nissan's EV experience, which we've already talked about. The second though is their established presence in a crucial market segment here in North America, trucks and SUVs. Yes, Honda does have the Ridgeline and Pilot in their fleet, but these are unibody vehicles, and they're not capable of the payloads and towing capacity of body-on-frame trucks like the Nissan Titan and Armada. If Honda were to develop their own full-size truck, the tally would be in the tens of billions of dollars since they'd essentially be starting from zero. It would be much cheaper and easier to take over, I mean merge with Nissan to gain access to their truck factories here in the states like the Canton, Mississippi plant where the Frontier Midsize Truck is built. Go Tigers. Go blue and gold, baby. Woo!
Speaking of the Frontier, a true 4x4 midsize truck would allow Honda to go head-to-head with one of the most highly respected cars on sale today, the Toyota Tacoma. Imagine a Frontier with a little more sophisticated interior and a dead reliable Honda V6 under the hood. Then add Honda's current desert racing campaign and oh buddy, I'm starting to feel some things. Honda wants to be Japan's top dog, and this merger just might be the way to do it.
Right now, Honda's stock price has been hovering around 30 bucks, and Toyota is over 190. If Honda and Nissan merged, the company would instantly become the third largest automaker behind Toyota and Volkswagen. Honda would be able to tap into more segments like large trucks, more EVs, and some rear-wheel-drive sports cars just like Toyota. If everything went well, that could be enough for Honda to finally catch up to Toyota within a decade.
But really, the biggest reason Honda wants this merger is to better position themselves in the ever-changing global car market. They want to fight the Chinese manufacturers. Back in December, Honda CEO Toshihiro Mibe said, quote, "The rise of Chinese automakers and new players has changed the car industry quite a lot. We have to build up capabilities to fight them by 2030. Otherwise, we'll be beaten." In simpler terms, we're cooked, bro. The cards are on the table. Everyone's business is at risk from China's burgeoning car industry. It's time to make some moves.
I think it's possible that Honda pursued the feasibility studies and memorandums of understanding with Nissan to see what was going on under the hood. It's very possible that the real feasibility study going on was Honda gauging the feasibility of merging with Nissan and becoming a top three automaker overnight. There was just one small problem: Nissan CEO Makoto Uchida.
When the merger was first announced, Uchida said that both brands would remain their own and carry on somewhat as usual. Kind of like when you move in with someone. That's not what he said, but that's what he meant. A business integration as they call it. More importantly, the two would need to remain equals. For one of these Japanese giants to proceed or dominate would be to insult the other. Put this in Fast and Furious terms, it's just like Vin Diesel and the Rock.
Not to be outdone, Mibe said that this merger was not just a rescue for Nissan, which in retrospect was a bit of foreshadowing. Also, Mitsubishi was there for all this, just kind of hanging out. Fast forward a few weeks to February, and all of a sudden, Uchida pulls the deal. I'm assuming he wants the company to stay its own entity, and also that he'd like to keep his job. See, Honda was demanding that Nissan become their subsidiary. Honda wasn't scared off by this move and they said that they're still willing to pursue the merger if Uchida steps down.
What happened next will shock you. Just kidding. A few weeks ago on March 11th, Makoto Uchida stepped down as CEO and was replaced by Nissan Chief Planning Officer Ivan Espinosa. Now, we don't have the transcripts of how that board meeting went down, but it's very likely the board did not appreciate that a company-saving deal was being killed simply because the CEO was refusing to take one for the team. The board probably thought it was smarter to bite the bullet and get absorbed by Honda than lose the company outright to a painful slow death over the next few years. With the cheetah out of the way, the merger is maybe, possibly, it's probably going to happen. I think it should happen.
And it's kind of like when you have two friends that finally get together after so many years and like, finally, uh, we can talk about something else. Huh? If you have a different take, I would love to hear it down in the comments. Love to hear uh what your theory is. I do read a lot of comments. Probably shouldn't, but I do. See you next time. One more thing. Not a green screen. Not a green screen. I'm in the I'm in the background. I'm in the foreground.