NEWS: Japan’s government tried to merge Nissan and Honda

It’s no secret Nissan is not doing well, hit with already flagging sales before its CEO was arrested in a high-profile case of corporate scandal before COVID-19 crisis even entered the picture. In an effort to rescue it, Japanese officials reportedly floated a plan to merge Nissan with Honda, which would have combined Japan’s second- and third-largest carmakers. The proposal was promptly rejected by both companies.

According to the Financial Times, the idea was advanced by unnamed government officials at the end of 2019. The impetus seemed to be a concern that technologies such as autonomous cars and electric cars, as well as new competition in an ever-consolidating industry were leaving Japan’s auto industry in the dust. The FT article goes on to say that Nissan and Honda both turned down the proposition quickly.

This would not be the first time the Japanese government inserted itself into Nissan’s affairs. In 1966, the Ministry of International Trade and Industry famously forced Nissan and Prince Motor Company to combine forces in an effort to reduce domestic rivalries in the face of strong foreign competition. Nissan, the larger company, absorbed the more technologically advanced Prince, giving birth to renowned models like the Nissan Skyline GT-R and Gloria.

MITI had an ever rockier relationship with Honda. When Soichiro Honda was just branching out into carmaking, after rocketing his company into a leadership position in the global motorcycle industry, he clashed with officials in two notorious incidents.

The first time came in the early 1960s. Again, fearing too much domestic in-fighting, government officials attempted to pass a law forbidding any newcomers to the auto industry. This enraged Soichiro Honda, and as the story goes, and sent him rampaging into the offices of MITI. That part might be apocryphal, but it’s true that Soichiro rushed the T350 and S500 into production in order to bypass those rules.

That second car, a rare domestic sports model for those times, prompted a second fight, as Soichrio Honda wanted to paint his cars red and white. At the time, those colors were reserved for emergency vehicles. Honda-san once again duked it out with officials, this time writing a scathing editorial in a major newspaper excoriating them for trying to micromanage something as basic as a color.

According to the FT article, Honda rejected the merger idea due to Nissan’s tie-up with Renault. The rejection wasn’t one-sided, though. The piece goes one to quote a former Nissan executive as saying, “A Nissan-Honda merger would only make sense to people who do not understand the car industry.”

Honda has always been staunchly independent, refusing to sell a stake to anyone even during the post-Bubble Era collapse of Japan’s economy that forced Subaru to sell shares to GM, Mitsubishi to DaimlerChrysler, Nissan to Renault, and saw Ford increase its shares in Mazda. Furthermore, as the article correctly points out, Honda and Nissan cars share few similarities whose consolidation could result in cost savings. Besides, Honda’s business model is such that it makes more money selling motorcycles than cars, and has thriving engine, powersports, lawn equipment, and jet divisions to boot.

Soon after both companies passed on the proposal, the COVID-19 pandemic struck. That forced the entire industry to hunker down and scuttled any hopes of the idea proceeding any further. If it had, it might have made for an interesting chapter in Japan’s rich automotive history, but the benefits for either company would not have been clear.

In recent years, Japan’s auto industry has seen rapid consolidation, Mazda, Suzuki, Subaru, Daihatsu, Hino and Isuzu are all aligned with Toyota. Nissan and Mitsubishi have combined as part of an alliance with Renault. Only Honda remains independent.

 

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13 Responses to NEWS: Japan’s government tried to merge Nissan and Honda

  1. Honda fully capable enough to stay independent, just need a more independent design department

    • BlitzPig said:

      Exactly. Honda merging with Nissan is as idiotic as the Mercedes merger with Chrysler. They have nothing in common other than the fact that they manufacture automobiles. Nissan’s sedan lineup in the US is utterly forgettable, while the Honda Accord remains the gold standard of mid size sedans.

      The Japanese government needs to stick to things they know something about, whatever that may be.

  2. RainMeister said:

    For the sake of Honda, I hope they never merge with Nissan. I say that as a life-long fan of Nissan; pre-Ghosn that is.

    Nissan is so uncompetitive at this point, that a merger would only drag down Honda, who are still very competitive both from a product and technological standpoint.

    Honda currently has an alliance with GM for the development and manufacture of electric vehicles, fuel cell technology, and autonomous driving technology. They don’t need to merge with another company to succeed.

    • harshith said:

      true honda is strong in india they didnt need anyone’s help to enter indian market. the indian’s love for honda is a lot than vw or toyota or nissan

    • Kyle Soler said:

      Well, they could be like Mitsubishi and form an alliance with almost anyone who has a pulse.

      This is referring to the fact Mitsubishi Motors has done quite a few alliances with different companies over the years.

  3. socarboy said:

    Well IMO I can hope that Nissan will part ways with Renault. also IMO Renault has pulled Nissan down over the last 20 years. I can only hope the “ship known as Nissan” can be righted over time.

    • Erik V said:

      a new 510 would go a long way towards that goal!

    • Ken said:

      Renault makes fine competative cars. The Alpine is a gem no Japanese make has its line up currently.

      • Ant said:

        Exactly Ken – this “Renault ruined Nissan” thing pops up time and time again on this site and it’s frankly complete BS.

        Nissan has made plenty of competitive cars since the alliance began in 1999 – not least two generations of Z car, the R35 GT-R, segment-defining cars like the Juke and Qashqai, and getting the jump on the entire industry when it comes to EVs with the original Leaf.

        And notably, it’s shared very few actual products with Renault (largely a few Europe/Asia-only small cars and a couple of commercial vehicles), certainly globally, so it’s not like Nissan is all of a sudden selling rebadged Renaults and things aren’t working.

        Entirely separately Renault has done absolutely fine doing its own thing, particularly with enthusiast-focused cars – Renault Sport products have been among the best in class for a couple of decades now, and as Ken mentions, the Alpine is another class-leading sports car.

        The sorry fact is that if Nissan currently sucks, that’s all Nissan’s doing. The fact that Ghosn has been absent since late 2018 and Nissan’s execs are still flailing around incompetently with little sign of direction suggests maybe it wasn’t all Renault and Ghosn’s fault like several here seem to think.

  4. Grant Iwasa said:

    A good idea on paper but totally flawed in reality. Here in Canada you can tell the cultural differences which results in totally different products other than they both manufacture. Honda seems like the dominant company; it outsells Chev, Dodge and Chrysler models combined in some regional markets while Nissan has been reduced to a small percentage of the market. In racing too Honda dominates the US and only competes with Toyota. Honda has no real full trucks and can use a full size body on frame truck.

  5. BlitzPig said:

    No, Honda does not need a full size, low tech, Americanized POS truck.
    It runs totally counter to EVERYTHING that made Honda what it is today. Their recent slump in creativity and lack of “fun” cars comes directly from the attempt of Honda of America to try to out Toyota Toyota.

    Honda needs to be independent, and to forge ahead on their own path, and leave the boring cars to Toyota and Nissan, and the domestic US manufacturers.

  6. f31roger said:

    I wish these companies would make really exciting new cars with a tangible price range and boost heritage programs.

    For many, older cars are highly sought (can we mention BaT) and so restructured with enthusiasts in mind.

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