The auto industry has had a rough time recently. During the pandemic, prices soared due to less new cars being built and a high demand for used vehicles. These developments created a seller’s market that’s existed for years and kept prices higher than the average consumer can afford. Now, there are rumors of a car market crash in 2025.
To combat these trends and to compete with other big electric-vehicle automakers, such as Tesla, Honda and Nissan have recently begun talks about merging the two Japanese companies.
In a video that garnered over 7.1 million views, car enthusiast TikToker Chris Pearce (@thechristopherpearce) discussed his view of why these two companies are considering a merger.
Why would Nissan and Honda merge?
According to Pearce, when Honda and Nissan recently announced that they had entered into a discussion of a merger, it immediately became “the biggest news in the car industry in a long time.” This is because the merger allows the two Japanese companies to compete in the EV market—which is dominated by companies like Tesla and BYD—and gain a better foothold in the Chinese auto market.
“The two brands are setting up a new holding company, through which they will pull their resources and do business jointly,” Pearce said.
CNBC reports that though the announcement only mentioned that the two companies have entered into negotiations, it’s expected that the “two companies are expected to sign a memorandum of understanding”—a non-binding agreement between parties which outlines how they can work together—and “comes at a time when many auto giants are struggling to cope with increased global competition from bigger EV companies such as Tesla and China’s BYD.”
Pearce suggested that this move is a logical next step for the two companies because “both companies have already been working together to develop new EV technology.”
“[Honda and Nissan] are hoping that by combining both their strengths they will be able to compete with the big dogs,” Pearce said.
Additionally, Pearce added that there are rumors that the two behemoths are also trying to bring Mitsubishi into the fold, which, according to CNBC, would make the Honda-Nissan-Mitsubishi company the third-largest auto group in the world, with a total of “8 million sales annually.”
Potential road blocks
CNBC also reports that the merger could face some serious challenges from the Japanese government. That’s due to “the potential for job cuts if a deal pushes through.”
According to an article from Motor1.com, Nissan’s former CEO Carolos Ghosen is “extremely critical” of the merger. The two automakers are in vastly different markets and their companies operate in very different ways, he says. Ghosen adds that the proposed merger is likely encouraged by Japan’s ministry of economy, trade, and industry. All in a “bid to shore up the Japanese economy,” and Honda isn’t completely on board with the idea.
Ghosan also believes the two companies will butt heads on how to incorporate their two brands and technology.
“You need to understand that Honda is an engineering organization, it’s very strong at engineering. And Nissan is very proud of its own engineering. So the battle here is to try to decide what technologies are going to be adopted by the new company—if it’s a merger—or by the new alliance. I can tell you is going to be very tough,” Ghosan said during an interview with Bloomberg.
At the moment, the companies have only confirmed that they are collaborating on projects. They have not fully signaled an intent to merge.
What do viewers think?
Many viewers believed a merger would only be a good thing for the companies involved.
“Pray Hondas quality doesn’t drop and this instead ups the quality of all three companies,” one said.
“Smart move,” another agreed.
Others thought it could be either a good move or a bad move with no in-between.
“This will be really good or really bad no middle ground,” a user said.
“Ok so are Nissan’s going to get better or is Honda going to get worse,” a second added.
“Nissan better not bring their CVT transmissions,” a user said.
Some claimed that this isn’t a merger, and instead Honda is buying Nissan.
“So Honda politely bought Nissan,” a user said.
“Honda is acquiring majority in Nissan that is different,” a user remarked.
The Daily Dot reached out to Honda and Nissan via email and Pearce via TikTok comments.
@thechristopherpearce Honda and Nissan announce merger #carnews ♬ original sound – Chris Pearce
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