The Speculator: Another (Necessary) Mega Merger Looms

By now, you have read the rumors – and some reports – that Honda is looking at merging with Nissan. This was in response to the Yokohama (and Franklin, Tennessee) based automaker’s financial collapse that sent alarms across the industry.

Honda may seem like the more stable suitor. Although it is considered an “upstart” compared to Nissan, the legacy of Sochiro Honda’s engineering innovation certainly has plenty to bring to the table. Between the two, you could have a Japanese automotive powerhouse that will complement each other with its current capabilities and know-how. 

It should be said that early indicators from this “rumor” that the company would operate as a single entity without any consolidation of production and development. Well…initially that would be the case. After all, it took Stellantis several years to figure out what it needs to do across its combined conglomeration. 

This gave me some food for thought. What if this merger came into fruition? What will be the outcome for both companies if combined into one entity that would challenge Toyota, Volkswagen, and the Chinese in terms of global domination.

In this Speculator column, I put these questions out into the ether. I have a feeling I could be completely wrong on anything I write forward from this point…

SHARED CAPABILITIES: Between the two entities, there are four – possibly five – automotive brands that will be sold in North America. Outside of this continent – including its home market of Japan – you could have up to three such brands available in every market.

In some cases, certain brands have a prominent presence in some markets. Mitsubishi was a big brand in the Philippines, where Nissan utilized their presence to gain more of a market share there. Mexico is a big market for Nissan, where Honda has been seen as a player behind them. Nissan also has the advantage in Europe over other brands, as well. 

When a merger between two automakers occur, you can expect some form of consolidation towards shared platforms, technologies, and power sources. Honda and Nissan has a host of each that could complement each other. Yet, there are competing technologies that may have to be rationalized towards elimination one from the other. 

Honda’s V-TEC engine technology has been a world leader for decades. Yet, Nissan has the variable compression system. If you were the combined management team of this company, which one would you choose? Or, do you find a way to combine both technologies into a single internal combustion strategy?

This also should take in consideration a product strategy that stretches across five brands. Which Honda would underpin a new Nissan – or, vice versa? Honda is known for building better smaller vehicles worldwide. Nissan could take Honda’s platforms for their new smaller vehicle lineup. Nissan does larger vehicles much better than Honda – such as the Patrol/Armada. You see where this point is going. 

KEY ELECTRIFIED COMPONENTS: Let’s talk electrification for a moment. Where Nissan has fallen was the scrapping of its hybrid driveline technology after its sales did not take off on the level of Honda and Toyota. Honda has a superior two-motor system that could be adapted onto Nissan’s products. Mitsubishi also has a great plug-in hybrid architecture that it could bring to the table. That is, if anyone is listening. 

The future is all about the battery-electric vehicle. Nissan has found its mojo with the Ariya and is set to put its EV architecture underneath a new sedan in a few years’ time. Honda has its own architecture that it uses on its smallest cars. They have considered enlarging the platform for larger vehicles in the near future.

There needs to be a singular electrified strategy across all brands. One that utilizes all successful architectures to achieve a combined and powerful lineup of vehicles set to compete with both legacy and start-up automakers in the electrified space. This was also serve as Honda’s exit with their initial North American EV strategy with General Motors. 

A LUXURY BRAND OVERLAP? With Honda and Nissan, you have Acura and Infiniti. Both brands compete with each other, yet they have struggled with their own identities. Part of the problem is location. Acura is a North American-based brand, whereas Infiniti has a very limited global footprint. If this merger goes through, there needs to be a new strategy for the premium/luxury market. 

There are two options available. They could scrap one or the other brand. Or, find a way to complement each other either through a single channel or the two existing ones.

The two could co-exist under a strategy that defines their purpose in North America – and, possibly, the world. For the sake of North America, if the combined entity would emphasize the sportiness of Acura and luxury of Infiniti with a lineup that fits, that might solve the issue. It gives the luxury brands sedans to keep it competitive and the SUVs that are fashionable and aspirational. Which ones will become this new premium/luxury is hard to even consider right now.

I would assume that Acura could use Infiniti’s luxury edge to elevate the TLX and Integra. The two brands will also have a wide variety of SUVs from the ASX to the QX80. Who knows what will shake out from this?

On a related subject, Nissan and Honda will have at least two sports coupes for global consumption – assuming that a possible R36 Skyline/GT-R might not make it to market. The upcoming Prelude and the current Z are icons worth saving in this combined company. How will they marketed is another rabbit hole that is akin to a game of tug-of-war. 

WHAT ABOUT MITSUBISHI? Although they bought back stock from Nissan to keep the larger company afloat, Mitsubishi still have a few entanglements that keep the two together. The Outlander is based on a Nissan platform, whereas the Triton pickup truck also is built with Nissan’s DNA. 

However, Mitsubishi needs new product urgently. The ASX/Outlander Sport has been on sale for well over a decade and needs to either be replaced or eliminated from the lineup. The Eclipse Cross is aging, as well. There had been too much talk of impending new vehicles – including electrified ones – for global markets. So far, nothing has been done about them at all. 

Under a merged Honda-Nissan entity, there are many things it could do for Mitsubishi. Make them an SUV specialist such as Discovery/Defender/Range Rover that offers capable vehicles at affordable prices? That seems to be a natural fit. Let’s not forget about pickup trucks, as they fit in this lineup globally. 

RETAINING FACILITIES: Remember when Stellantis said they would retain all facilities after the merger that formed the company? So far, two plants had been closed – one “temporarily.” If Carlos Tavares’ successor comes in and starts trimming the fat, we could see more facilities close worldwide.

This is also a concern of a potential Honda-Nissan merger. Two countries could feel the heat in terms of retaining production facilities for the combined company – Japan and the USA. It would depend on whether consolidation will occur between the two. 

However, there is an opportunity to utilize the entire production capacity across both companies. If a tariff war does kick off in the USA, this would give an opportunity for both Honda and Nissan to bring vehicles assembled elsewhere into their combined facilities. That would include producing Mitsubishi vehicles again stateside.  

You hate to see an automotive entity bite the dust after decades of highs and lows. You could also dissuade one entity from merging with another to save face. What happened next between Honda and Nissan should be worth watching. Perhaps they can show us how to consolidate two major players in the industry the “right” way. 

At this point, something has to be done with Nissan. Is Honda the right partner to save them? We shall see…

All photos by Randy Stern