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.