Why Would Honda Buy Nissan?

By
eric
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There are rumors afoot that Honda – which is healthy – is considering buying Nissan. Which isn’t. Just a couple of weeks ago, a senior person within Nissan’s hierarchy said the company had “12 or 14 months to survive.” That’s not healthy.

That’s just shy of dead.

Honda is not in that position. So why would Honda put itself in that position – by doing what amounts to chaining itself to a dead man walking?

Honda has been very smart so far in that it has avoided the malinvestment in battery powered devices that has left companies such as Nissan – that didn’t avoid it – with months at most to survive. It currently sells only two devices – and they are Honda-rebadged versions of another company’s devices. The “Honda” Prologue (and its Acura-badged stablemate) being in fact Chevrolet devices that General  Motors mailinvested in. This means Honda won’t lose nearly as much money on the other-brand-devices it is reselling under its own brand (and for compliance reasons only). GM spent the money designing and proofing out the device that Honda tweaked a little bit cosmetically. The expensive stuff was paid for by GM.

Nissan has destroyed its brand in part by malinvesting in devices such as the Leaf and the Ariya – including the money wasted on the checks sent to the actress Brie Larsen to try to sex up these devices.

It hasn’t worked.

Just as it hasn’t worked for any car company that thought it was a good idea to stop making cars and switch over to peddling devices. The ones that did are all in trouble – even VW, which was once one of the most successful brands around. It is teetering on the precipice of bankruptcy and dissolution.

Nissan also gave up on the Maxima – and soon, the Altima. On cars, as a class. Instead, it became a crossover brand, just the same as pretty much everyone else. Trying to sell the same thing as everyone else is often a hard sell. Especially when the things you’re selling are generally regarded as being not as well-made as the same things sold by others.

Nissan also turned the compact-sized Frontier it used to sell in huge numbers – because the little truck was cheap and rugged and so exactly what lots of people wanted in a truck – into a big, expensive truck that lots of people don’t want or can’t afford, which ends up amounting to the same thing.

The brand’s Infiniti division is as dead in the water as Titanic was after she hit the berg. We all know what happened soon thereafter.

So – again – what’s in it for Honda?

There’s not much to scavenge – as was also the case after the Dodge, Chrysler, Jeep and Ram truck brands were acquired from Daimler (parent company of Mercedes-Benz) for pennies on the dollar by Cerberus back in 2007. Remember that? Everything worth anything had already been exploited by Daimler prior to the sell-off like a $20-per-hour Vegas escort – and the sloppy thirty-thirds kicked to the curb afterward. Dodge and Chrysler did surprisingly well in spite of that by leveraging the platform – or underlying architecture – of the Mercedes E-Class sedan they were left with to create the very successful Charger and Challenger that had a production run of more than 15 years. Of course, that’s all over now – and probably for Dodge and Chrysler, too.

So what’s to be gained here?

According to the summary blurb that precedes a CNBC article published the other day, “Top Japanese carmakers Nissan Motor and Honda Motor are understood to be exploring a blockbuster merger, as the two rival companies seek to stay competitive on the road to full electrification.”

Italics added.

What do they think think lies down “the road to full electrification”? Has Honda’s management lost its ever-loving mind? The company has so far steered clear of “the road to full electrification.” Why would its management now decide the time has come to steer onto it?

Well, because China is why.

The car business is a global business and China is a much bigger market than the North American and European markets – both of which are in decline due to an aging and impoverished population that increasingly cannot afford new vehicles. But China is bursting at the seams with young people and in China, there is a huge market for battery-powered devices because the Chinese government allows the sale of inexpensive battery powered devices that cannot legally be sold in North America or Europe – irrespective of the “threat” of the “climate” that we are told is “changing.”

“The prospective tie-up could create the world’s third-largest auto group by vehicle sales, with 8 million sales annually, according to Citi. That would place Nissan-Honda-Mitsubishi behind fellow Japanese automaker Toyota Motor and Germany’s crisis-stricken Volkswagen, respectively.”

Italics added.

Does anyone ask why VW is “crisis stricken?” Could it be – assume the voice of the Church Lady from Saturday Night Live’s better days – on account of VW’s decision (made under duress, granted) to take “the road to full electrification”?

And now Honda seems to be wanting to ride shotgun with Nissan and head down that same road.

The acrid electric smell of death is in the air.

. . .

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Related posts:
  1. What Killed Nissan?
  2. The “Honda” That Isn’t
  3. Honda Becomes GM (and Vice Versa)
  4. Dead Nissan Walking
  5. Honda Takes a Pull on the Crack Pipe

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55 COMMENTS

  1. I was thinking something – again and again, the financial press in the UK tends to state that the cause of Nissans woes is that they dont have a good enough electric offering. (Even though on the same page they will write about how other car makers are loosing money and cannot seem to sell electric cars they do make – but they cant seem to link the two). One thing they never seem to mention is the fact that (correct me if I’m wrong Eric) Nissan was the first large automaker to develop and actually sell an electric model – the Leaf in 2010. Here in the UK it actually went on sale before Tesla came on the scene. This was at a time when Nissan was the number one brand in the UK, with the Qashqai being the UKs best family car for several years running (i remember because after the kid I was buying my first car in the UK around that time). Ofcourse, instead of focusing on developing cheap, reliable, sensible cars like that – they focused on all electric….. And well here we are today…

  2. I watched an interview today with Carlos Ghon, former CEO of Nissan – who made his great escape out of Japan in a box, to avoid rotting in prison. He suggested that corporate/govt culture is more probably behind the potential merging of the two brands, more so than sound economics. It’s about saving face.

    Eric, you alluded to Daimler/Chrysler merger from the early 2000’s, which after the merger between Mercedes and Daimler. Economist, Martin Armstrong and his Princeton economics was brought in to fix a 1 billion dollar short of the British Pound gone wrong by Mercedes. Most of that merging was to hide the staggering losses. Below is an old post from his daily blog:

    (Armstrong Economics):
    “….I cannot tell you how many companies we had to rescue from shorting the pound out of fear it would collapse. The propaganda even convinced the top German auto manufacturer, Mercedes, and they shorted the pound for two years worth of sales. The exact opposite took place. We were called in to reverse all the hedges that lost $1 billion because of that nonsense. They then set up a meeting with the board of Daimler which was separate back then. The board had passed a resolution that once a hedge was taken they would let it run. We made back the $1 billion for Mercedes and the last day of the fiscal year, Daimler and Mercedes were merged to hide the $1 billion loss at Daimler.”

    A lot of high paid, not so genius people, run too many companies, especially in the auto sector.

  3. Seems like a really bad idea, especially for Honda.

    IMHO, the automakers should be broken up into smaller companies, rather than combined into the dysfunctional disasters they are becoming.

    I have never gotten why people think it’s a good idea combining two in trouble companies. Most of the time it doesn’t work out. It’s not like they can’t do joint ventures when it makes sense. Mergers don’t.

  4. EVs are fine for nations without fossil fuel deposits. They don’t make sense for oil producing countries. However I personally love hybrids and hope they become the norm.

  5. If (big if) DJT actually levies 100+% on the Chi-Com Patent Theft Mafia, aka the PRC, then the PRC will cascade into economic ruin. So if Japan wants to redesign its entire economy to leverage the PRC’s economy, well, then, good luck, but it sure doesn’t look that they’re reading the ginseng tea leaves.

  6. I’ll stick with my 2011 Explorer. No car payments makes me better off financially than 90% of “the pretend people” that buy things on credit.

    My advice to Hondaha, only borrow if the item will make you money.

    • Amen, Ralphie –

      It’s why I have (and will keep and maintain/repair) my 2002 pick-up. Not having a $500/month car payment is freeing in a way that debt slaves will never understand.

    • ………poppi December 22, 2024 At 11:06 pm

      “solid borrowers will rise to the point they are forced to reign in their spending”

      • Some WEF partners in 2023…..VW on there….

        Feeding the beast….don’t give one cent to any of these companies….

        Some common ones…

        Coca Cola
        Pepsi
        MasterCard
        Visa
        Google
        Sony
        Dell
        Chevron
        Meta
        Pfizer
        Nestle
        Microsoft
        Amazon…..it took all the retail business…an outlet for cheap crap from China…it’s vans block the streets everywhere…..

  10. GTR, Z, Frontier, Infiniti Q50’s, etc

    Rwd platiforms, ATTESA, truck trucks rather than a unibody one, etc.. Maybe they can revive the S2000 tweaking the Z platform and also just use existing tech they’d acquire to make rwd cars and trucks but with their engines.

    Theres a lot to be gained if they just ignore the EV bullshit

  11. For now, in the US market, Nissan has two actual “body on frame” truck/SUV platform designs for which tooling still exists in factories. Honda does not have similar vehicles.

    Nissan also has the Z car which could be a prestige vehicle managed properly. I’ve even seen Brie driving one in a commercial in the last year.

    Maybe the EV platforms offer something for Honda. A lot of investment went into making the Leaf and successor in Tennessee.

    The cars are probably all gone in the deal with the possible exception of the Versa.

    • Hi Roscoe,

      THat’s true – but the Titan isn’t selling well and is apparently about to be cancelled. The Frontier is too expensive (and impractical) to be competitive. Why not just buy a full-size truck with a proper bed, instead?

    • Great link; thanks.

      ‘[Ghosn] believes Japan’s Ministry of Economy, Trade, and Industry (METI) is pushing the deal to shore up the Japanese economy, and that Honda isn’t happy about it.’

      Sounds about right. In the late 1980s when ‘Japan superpower’ books sagged the shelves at bookstores, METI (then called MITI) was the master planner behind Japan’s drive to rule the industrial world.

      Today, China’s Ministry of Commerce exercises the influence that METI did a generation ago:

      ‘On October 28 and 29, 2024, [Japan’s] Ministry of Economy, Trade and Industry (METI) held the third meeting of the Japan-China Export Control Dialogue and a Japan-China joint outreach event in Tokyo with the Bureau of Industry, Security, Import and Export Control, Ministry of Commerce, the People’s Republic of China.’

      China is in the driver’s seat now. If METI compels Honda and Nissan to merge, it’s going to be a mating of dinosaurs — the beginning of the end for the Japanese auto industry. So far, Toyota is Japan’s unviolated virgin. But for how long?

      • MITI. The geniuses behind decisions (luckily they lost) to prevent Sony from acquiring a license from Bell Labs to manufacture transistors, and the “Honda is a motorcycle company” attempt to prevent Honda from entering the car business.

    • The entire merger deal is unquestionably METI/government driven.

      On the surface, it’s appears to be a win-win.

      But since there’s so much low hanging fruit/money to be picked off by the (((TPTB))), it may be that not only Nissan is destroyed, but perhaps drags Honda to their doom also.

      Yikes!! YMMV….

      • Hi Saxon,

        Aren’t Honda and Nissan pretty much DOA, anyway? I will be the first to admit my knowledge of cars is limited, but I cannot remember anyone around me buying a Honda of any kind within the last two decades. Honestly, I forgot the Honda brand until Eric wrote about it.

  13. The ‘road to electrification’ has worked so well for VW that it has just announced some 35 thousand jobs will go, at least 2, and possibly up to 5 factories will close, and there will be no pay increases till 2032.

    And even that may not be enough.

    Meanwhile, China has a surplus of new vehicles and this is coming to the fore with the recent bankruptcy of Jiuye, which is/was a joint venture between Baidu and Geely. This is being blamed on fraud by the company’s top brass, which may well be true, but given that the brand was also fully sold on the ‘road to electrification’, there were probably multiple reasons for its demise – like the fact they were selling too few cars.

    And such a strategy – selling fewer cars yet have the share price go up – only works for Elon Musk, who will soon be fly his Tesla Roadster all the way to Mars, with full self-driving to boot.

    Perhaps in the case of Nissan and Honda, their leadership has overlooked the fact China is a one-party state, with a mostly centrally-planned economy, and with economic reporting which seldom has much of a relationship with reality.

    Or, as others have pointed out, they are hoping for a dollop of government money to ‘assist’ them.

    Either way, when it all inevitably falls over, they, just like VW, will cry that ‘no one could see it coming!’

  14. I’ve long suspected that Nissan gave Disney a bunch of money to push “The Marvels” out the door in order to make Brie relevant again.

    Disney would have been better off shelving the movie and eating the writeoff.

  15. As Warren Buffet stated, “When the tide goes out, you see who is swimming naked”.
    With new vehicle sales dropping it’s completely predictable some manufacturers were going to be in trouble. Stellantis is reaping what they had sown by overpricing unreliable, low quality vehicles. Nissan certainly is paying the price for the EV tide going out, but their CVTs, many now paired with Turbos, are atrociously bad and that is embedded in the minds of savvy vehicle buyers; much the same as Hyundai/KIA can not build a quality engine.
    I think there will be some other consolidations and possibly liquidations if the economy hits the iceberg dead ahead.

    • “much the same as Hyundai/KIA can not build a quality engine.”

      A long time ago Kia had a great engine…but…it wasn’t Korean…it was Italian….

      Korea…A Fiat 124 was named a Kia….

      The Fiat 124 was also produced under the name Fiat-KIA 124 by Asia Motors in South Korea, between 1970 and 1975. In total 6775 units were assembled

      1950’s and 1960’s had better cars…..2024…the worst…getting worse….then all EV’s…total garbage…the end…

      Bring these back for poor slaves….soon there will only be $50,000 EV’s…the slaves will walk…

      1966 Fiat 124 Berlina 4 door sedan….4th biggest selling car in history…millions were sold in multiple countries, under different names…

      It ate VW beetle sales…..it forced VW to develop the Golf

      they are very simple, you can fix it yourself…the new cars are unfixable, computer filled crap…

      5 passenger, 4 wheel disc brakes, rack and pinion steering….these were advanced tech back then…. no computers, all analog…better handling then a lot of sports cars…

      NOTE….historic 4 cylinder engine designed by Lampredi…the Ferrari engine designer…great engine…

      curb weight 1885 lb….new cars are 3000 lb and up…

      New MSRP $2000….$19,000 in 2024 dollar

      One sold on BAT recently for $13,000

      https://www.youtube.com/watch?v=NcZbE-X6KFw

    • Stellantis includes Alfa Romeo, which makes the Giulia and the Stelvio, and the high end Quadrifoglio versions of each, which are top of class cars and reasonably priced vs their competitors. But, being owned by Stellantis could kill the excellent Alfa’s.

      • The replacements for the Giulia and Stelvio have been designed as dEVices only, unfortunately, although they’re built on so-called multi-energy platforms, so with Cheapskate Carlos gone (good riddance), who knows if French Leyland will change their mind.

        • Unless Alfa reverses and re-commits to gasoline engines and pushing the limits of performance as it has always done, it will die.

          • I just bought a Stelvio QV since it’s the last year. Hated to reward the company but the design and performance are what autos should be about. All credit to the former CEO Sergio Marchione. He embodied the attributes the present Board should seek in a new CEO if they want to survive. (I had a hard time not buying a Giulia QV but I live in northern Ohio so I bowed to practicality)

  16. ‘According to the summary blurb that precedes a CNBC article … the two rival companies seek to stay competitive on the road to full electrification.’ — eric

    This summary blurb exemplifies an exasperating practice of the Lügenpresse, in which headline and blurb writers often append a completely different spin than the copy submitted by the reporter, which says nothing about ‘the road to full electrification.’

    In this case, I infer that the reporter is London-based. But some 80 IQ headline writer in Englewood Cliffs, NJ thought ‘the road to full electrification’ would play well with CNBC’s Americlown readers.

    If appointed as executive director of DHS’s Disinformation Governance Board formerly headed by Nina Jankowicz, I will put CNBC on the road to full electrocution. BZZZTTTT!!!!

  17. Nissan should buy Honda.

    That way, Nissan would make some money.

    It’s only money until you don’t have any.

    Nissan shares are up more than a dollar. So, what now?

    Has Honda been buying Nissan shares at five dollars, as many as they can? You will own the factories, not that bad of a deal.

    Shoot yourself in the foot and build electric vehicles. Doesn’t work out like you would hope, but what they hey?

    Another great day in America, beer drinking all day long on a Saturday is the norm. One of the rules!

    Laws? What laws? We don’t need no steeen-king laws.

    Rules based order? We don’t need no steeen-king rules based order!

    There ain’t no rules based order, just a few wars of which we don’t need anywhere.

    That is all.

  18. Regarding the Nissan/ Honda merger; what are the odds that government money is involved? Perhaps if they stuck to selling the products that sell best in a certain region that would make more financial sense. In other words EVs in China and gas or diesel elsewhere. That way they can debug them in a market that wants them and if a market is forced upon them elsewhere they would have products that are ready to go.

  19. [I]n China, there is a huge market for battery-powered devices because the Chinese government allows the sale of inexpensive battery powered devices that cannot legally be sold in North America or Europe

    I doubt the reason these EVs are selling in China is that they’re inexpensive, more likely it’s due to Chicom “nudging”. EVs make as little sense in China as they do in any other part of the world, and I’m sure Chinese consumers would much rather have bought a German brand ICE-powered car if they had only been allowed to do so.

  20. I thought I saw a news item recently that speculated Honda and Toyota were going to merge. Now that would be a powerhouse of a company but Govco would probably try to block it to protect Government Motors.

  21. Could be that Nissan decided it was better to sell off at a dollar than be liquidated at twenty five cents? Not sure what Honda’s motivation is, nor what the motivation is for most auto makers.
    The EV market no longer exists. It never really did, without massive government intervention. Which never works out well.

    • And when it dies, there won’t be too many legacy manufacturers left considering quite a few of them dove in head first into the shallow end

  22. The ChiComs will use every angle to protect their own EV manufacturers. Honda/Nissan may get a toehold on the mainland but that’ll be about it. With respect to EVs tho, I’m assuming China is unafraid of coal and nuclear energy & lack the environazi resistance we face here. That is, they’ll have the generating capacity and distribution to support gazillions of watts of energy required by eeeeveeees.

  24. The EV issue aside, Maximum Bob Lutz predicted years ago that there would be consolidation in the industry because the world doesn’t need a dozen different companies building the ubiquitous, compliance 2.0T engine.
    I believe he indicated the likelihood of manufacturers merging regionally (i.e. Ford & GM, BMW & MB) to accomplish this.
    Sounds like the same result but for slightly different reasons.

    To hear the media champion what the Chinese have as an “auto industry” sounds more like they’ve simply cornered the market on oversized, HIGHLY flammable golf carts.
    And that’s the phony market that all manufacturers except Toyota (and their alliance with Subaru & Mazda) seem to still believe is the future?

  25. The China play hasn’t really worked out. Neither has India. The overly optimistic view from 20 thousand feet is that there are ~two billion people emerging from poverty and they’re going to want to buy stuff. In China what they bought was US debt (the CCP at least), unprocessed food and real estate. Not US real estate, but Chinese. Turns out the CCP wouldn’t let the people invest in US companies, so they invested in their own. Same thing with India.

    Worked out great for the federal government though. They exported all those dollars that came back as new t-bills and debt. Kept the economy going far longer than any of the naysayers predicted.

    But now that the world (Europe) is once again choosing up sides, I wonder if the mary-go-round of money will continue? When it stops it won’t be pretty, that’s certain. And that’s why Trump won in a landslide. The establishment has been kicking that can since 2008. That can is about to run out of road, and like the flat earth there’s nothing past the edge.

      • Hi Ken.

        My advise? Hope for the best and plan for the worst. Or as the old saying goes “The only person who can save you is you”.

        He’s bound to accomplish something but I’d say it’s better to cover your own ass just in case.

    • Trump is a smart guy. He’s gone through a number of bankruptcies, even successful gamblers lose. So he understands the process.

      The dollar is going to finally snap under the accumulated stress of communist spending, there is no way around that.

      Afterwards, though, there are a couple paths. To be sure, there will be variations on them, but ultimately there are two.

      One path preferred by the forces of darkness includes things like CBDCs, UBI, and absolute control over every living soul (hat tip the late Leonard Cohen). With the powers of this earth keeping all real wealth (gold, silver, productive enterprises) for themselves as always.

      The other path preferred by the forces of light must include forgiveness, with a debt jubilee, freeing of prisoners, and repudiation of debt.

      One path leads to an eternity of communist stagnation and misery. The other leads to a continuation of humanity as a species.

      • Thing is though, what’s in your wallet? More correctly, what’s in your 401(k)? If you’re like most Americans (which I’m guessing you probably are not) your nest egg is stored up in index funds and other blown up assets. When the debt resets, the best case scenario is that everyone resets their dollars to the new standard. At worst, well, better enjoy foraging because that’s how you’re going to spend your retirement years.

        The MMT fools get one thing right -We owe it to ourselves. Not the debt, but the stock price. The people who trade on our behalf take the cream off the top but the bulk of the value of the NYSE is people pumping their retirement into the market. Because that’s what they were told to do.

      • A Debt jubilee will do nothing to prevent collapse.

        Government regulation permeates every facet of life. As long as that continues, the system will continue to stagnate and eventually implode. The automakers cannot legally make a product the consumer can afford.

        Centrally planned economies don’t last.

      • Every loan has two parties to it: The lender and the borrower.
        A debt jubilee benefits the borrower, but will harm, or even wipe out, the lender.

        Many, if not most, ordinary people have their savings exposed to debt securities (bonds), including those issued by the federal Treasury. The exposure is typically not direct, but instead via mutual and/or exchange-traded funds, but that makes no ultimate difference.

        To forgive that debt means these prudent savers would be severely harmed, while the profligate borrowers – which includes the federal government – would be made whole.

        How does this solve anything?

        In a truly free market system, with sound money – i.e. gold/silver-backed or similar – debt can never rise to the levels seen today, because there can be no unlimited currency creation via ‘printing’, so eventually interest rates imposed on the more indebted and less solid borrowers will rise to the point they are forced to reign in their spending, or will just go bankrupt.

        The true villain here is the unbacked fiat money system, and the Fed/commercial banks that maintain it and benefit from it.

        No meaningful correction of the current imbalances is possible until we move back to a hard money standard.

        But that will be resisted, because of the huge unearned rewards the existing system provides to the ‘small club’ running it.

        Which is why they are instead looking to CBDCs, which would let them control when, how or where every single cent of our money may be spent.

        • “solid borrowers will rise to the point they are forced to reign in their spending”

          i think you meant “rein in their spending”

          Reigning in their spending is a whole different animal.

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