The automotive industry is facing significant challenges, including declining sales in China and struggling companies like Nissan. In response, Japanese automakers Honda and Nissan are exploring a potential merger. However, history suggests that such mergers rarely succeed.
Several factors contribute to the difficulties of carmaker mergers. Downsizing measures often face resistance from both sides, as neither wants to take the hit. Political opposition also plays a role, with governments pushing companies to preserve jobs.
The case of Stellantis is a prime example. The 2021 merger between Peugeot and Fiat Chrysler was initially successful but has since suffered a slump in vehicle sales and a drop in profit. The company’s CEO resigned this month, and it is now looking for a new top executive.
Nissan’s experience with the Renault alliance also offers insights into the challenges of carmaker mergers. While the partnership saved Nissan from collapse and helped it become profitable, neither company achieved long-term success. Eventually, executives at Nissan chafed against being controlled by Renault, leading to a split in 2018.
Experts predict that Honda and Nissan may struggle to replicate Hyundai and Kia’s success with their own alliance. Marc Cannon, a consultant who was a senior executive at AutoNation, expressed doubts about the merger, citing concerns over Nissan’s brand damage and quality issues.
Despite these challenges, analysts believe that the potential benefits of a Honda-Nissan merger could outweigh the risks. Sam Fiorani, a vice president at Auto Forecast Solutions, noted that Nissan has the technology to build full-size pickup trucks, which could be valuable for Honda in the future.
Ultimately, the success of any carmaker merger depends on various factors, including cultural differences, management structures, and brand strengths. While history suggests that such mergers rarely succeed, it is also possible for companies like Fiat Chrysler and Hyundai/Kia to defy expectations with successful partnerships.
Source: https://www.nytimes.com/2024/12/24/business/honda-nissan-auto-merger-deals.html