Challenges Faced by Nissan
Nissan is currently navigating several significant challenges within the automotive industry:
- Declining Sales and Market Share: The company has experienced a sharp drop in global sales, from 5.8 million vehicles in 2017 to 3.3 million in 2022, alongside a shrinking market share in key markets such as the United States and China.
- Outdated Product Lineup: Models like the Altima and Sentra are lagging behind competitors in terms of design, technology, and consumer appeal.
- Damaged Brand Image: Scandals involving the arrest of former CEO Carlos Ghosn and revelations about improper vehicle inspections have eroded consumer trust.
- Strained Alliance: Tensions within the Renault-Nissan-Mitsubishi Alliance regarding control, strategy, and profit-sharing have weakened its effectiveness.
- Underestimation of Hybrid Demand: Nissan underestimated the demand for hybrid vehicles in the U.S. market.
- Competition: The company faces intense competition from Chinese automakers like BYD, particularly in the electric vehicle sector.
To address these issues, Nissan is focusing on revitalizing its product lineup, rebuilding consumer trust, and managing alliance uncertainties. The company plans to launch 12 new electric models by the end of the decade and is working to strengthen corporate governance and improve quality control.
Challenges Faced by Honda
While Honda’s situation is not as critical as Nissan’s, it still faces notable challenges:
- Market Uncertainty: The success of their new EV, the Afeela 1, remains uncertain, compounded by potential political factors that could impact their strategy.
- Sales Strategy Concerns: Shifting to online direct sales for the Afeela 1 has raised concerns among Honda dealers.
- Potential Policy Shifts: Changes in policies, such as tariff impositions, could affect Honda’s production strategies and investments.
- Lagging in the EV Sector: Similar to Nissan, Honda has been outperformed by Chinese firms in the electric vehicle market.
Honda is responding by exploring strategic alternatives, recalibrating its production approach, and collaborating on electrification technologies and software development.
Failed Merger Attempt Between Nissan and Honda
In late 2024, Nissan proposed a $60 billion tie-up with Honda to compete against Chinese automakers. However, the merger talks ultimately collapsed due to several factors:
- Ego Clash: Disagreement over hybrid technology use, with Honda wanting Nissan to adopt its traditional hybrid system instead of Nissan’s e-Power system.
- Desire for Control: Honda’s reported desire to make Nissan a subsidiary was unacceptable to Nissan.
- Nissan’s Pride and Intransigence: Nissan insisted on equal treatment despite its weaker position and was unwilling to close factories, which was seen as politically sensitive.
- Slow Decision-Making: Honda perceived Nissan as slow in making decisions, contributing to the breakdown of talks.
- Independence vs. Economies of Scale: Nissan emphasized its independence in decision-making, conflicting with Honda’s focus on maximizing economies of scale.
The failed merger highlights the complexities and tensions within the automotive industry, particularly among traditional manufacturers navigating the shift toward electric vehicles and evolving market dynamics.