Japan officials tried to bring Honda and Nissan to the table for the merger

KUALA LUMPUR: In the automotive world, mergers and alliances of the companies are commonly seen for the development of new platforms, technologies, or vehicles. For this concern, several factors push the automakers to make such associations. Recently, the Financial Times reported the merger idea of two automotive giants - Honda and Nissan, which could not turn into reality.

According to the publication, the Japanese government officials brought the idea of Honda Nissan merger last year in an effort to address the problems of the country's domestic automakers. Nissan had long been in trouble, and as per the publication, officials were seeing Nissan's alliance with Renault start to sour after Carlos Ghosn's arrest. They were frightened that Nissan could solve these issues altogether with Renault.

For Honda, the report says that officials remain wary of the country's third-largest automaker as rivals are merging and consolidating. Out of the eight automakers in Japan, Mazda, Daihatsu, Suzuki, and Subaru have a partnership with Toyota. Nissan also has a partnership with Renault and Mitsubishi. But, Honda is the only one without a capital tie-up. Though it has worked with GM on the development of self-driving and electric vehicles over the past few years.

However, the idea fizzled before it even began as both automakers rejected the plan immediately, and soon it became lost in the chaos caused by the COVID-19 pandemic.

It is even hard to imagine the merger of these two. By remaining completely independent, Honda is unique among automakers; it makes most of its profit from motorcycles and engines as reported by the publication. On the other side, Nissan reportedly wanted to focus on its turnaround plan and strengthen the alliance with Renault. Nissan has plans to roll out a number of new vehicles in the coming 18 months.

"A Nissan-Honda merger would only make sense to people who do not understand the car industry," said one former Nissan executive.

For the doomed merger talks, compatibility of the platform, and parts between Honda and Nissan vehicles would have been another sticking point.

Also read: Nissan forecasts a net loss of over $6.3 billion for FY2020