A Honda-Nissan merger could have muted impact for U.S. buyers, experts say

If Honda and Nissan executives are right, a potential merger could help them compete better against bigger rivals around the world. But customers in the United States might not notice much of a difference right away.

“A merger or alliance here would likely not mean much to consumers in the near term,” said Erin Keating, executive analyst at Cox Automotive. “We have seen mergers happen in this industry before, and over time some branding may change and product portfolios merge or assimilate, but for the foreseeable future, the average consumer in middle America would likely notice no impact at all.”

Nissan said Wednesday that the two carmakers had been “exploring various possibilities for future collaboration” for months. Honda chief executive Toshihiro Mibe said his company is considering a merger or joint ventures with Nissan that could put them in a better position to take on competitors.

Several of those peers are considerably larger. Honda generated 8.7 percent of U.S. auto sales in the second quarter of this year while Nissan had 5.8 percent, according to auto industry ratings and research provider Edmunds. Those were good for fifth and seventh place in U.S. market share, behind General Motors, Toyota, Ford and Hyundai/Kia in the top four, with Stellantis coming in sixth.

Joining the two Japanese carmakers could give them greater scale to weather a tumultuous global auto market. In the United States, it could create a stronger competitor to U.S.-based manufacturers like General Motors and Ford at a time when President-elect Donald Trump has promised new trade barriers to protect domestic companies.

Vehicle models from both companies remain competitive across sizes, so don’t expect a Nissan-Honda partnership to reduce the number of models offered by their various brands, analysts said. Both companies have brands with distinct identities of their own.

“Honestly, I suspect a fair portion of the general population is not even aware that Nissan is the parent company of Infiniti, or that Acura is part of Honda,” Keating said.

But joining forces would allow Nissan and Honda to make up ground in a competitive electric vehicle market, said Jessica Caldwell, the head of insights at Edmunds. Lagging sales have made it harder to finance electric vehicle development for smaller car companies, meaning players like Nissan and Honda need to rely more on partnerships to compete, Caldwell said.

“Everyone is struggling to produce this vehicle at price ranges that are still profitable for them, as well as at price ranges that are acceptable for the consumer,” Caldwell said. “Working together is going to expand upon their pool of resources to better execute in this market.”

Last year, Honda manufactured almost 4.2 million cars and sold nearly 4 million globally, while Nissan said it produced and sold about 3.4 million. Toyota produced and sold about 10 million cars in the same year, while Volkswagen said it built 9.3 million and sold a similar number. General Motors sold about 6.2 million vehicles.

Honda and Nissan, along with Mitsubishi, have been exploring collaborations this year. In August, the three companies announced Mitsubishi would be joining Honda and Nissan in developing electric vehicles, new software and green technologies.

“We are very pleased to welcome a new member to the strategic partnership between Honda and Nissan,” Makoto Uchida, Nissan’s chief executive, said at the time.

Nissan holds 24 percent of Mitsubishi’s shares, meaning a merger with Honda could bring Mitsubishi into the fold. Mitsubishi produced just over 1 million vehicles in 2023.

Honda’s reported operating profit in the July-September period this year marked a 15 percent year-over-year drop, with the company blaming weakness in China. But Honda’s sales increased in the United States and Japan.

Nissan has been cutting costs amid increasing competition and a rapidly shifting market with a widening array of electric and hybrid vehicles. The carmaker announced last month that it would cut 9,000 jobs and reduce production capacity by 20 percent, and the board of directors halted the dividend it usually pays to investors. Uchida took a voluntary 50 percent pay cut as part of the restructuring.

“Facing a severe situation, Nissan is taking urgent measures to turnaround its performance and create a leaner, more resilient business capable of swiftly adapting to changes in the market,” the company said in a Nov. 7 financial report.

A combination with Honda would not be Nissan’s first attempt at joining with another global brand. It spent almost 20 years in an alliance with French company Renault before that partnership fell apart following the 2018 arrest in Japan of CEO Carlos Ghosn. He later fled to Lebanon before his trial and sued Nissan for defamation.

Joe McCabe, president and chief executive at AutoForecast Solutions, said Wednesday on CNBC that joining with Honda could help Nissan, which he described as a company “in a no-man’s land” with no leadership position in any market globally.

McCabe said the combination in some ways represents “two Japanese companies working together for the greater good of a Japanese economy,” to stave off competition from elsewhere.

Both companies will have to contend with a Chinese government that wants to force out foreign suppliers, and with a Trump administration that will be focused on erecting new trade barriers for the U.S. market, McCabe said.

Nissan has manufacturing sites in the United States, but it has been scaling up production in Mexico. Trump has promised to impose tariffs of 25 percent on Mexico, along with a broader 10 to 20 percent universal tariff on all imports.

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Jintak Han contributed to this report.