🇯🇵 Japan: Honda and Nissan to remain just friends

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🛑 Honda-Nissan Merger: DNF

In December 2024, Japanese automakers Honda and Nissan (with junior partner Mitsubishi) announced a tie up to better compete against Chinese automakers (BYD is now the third largest auto company in the world by some measures) and their Korean rivals. Nissan had gone from being the second largest Japanese car company to a brand that was in the news for the arrest and Hollywood-esque escape of their chief executive Carlos Ghosn (there’s an entire Netflix documentary about this).

So with Honda entering negotiations as a senior partner, Nissan were effectively being forced to become a subsidiary of Honda, which was unacceptable to Nissan who were pushing for a merger of equals. Honda wanted Nissan to complete their ‘turnaround action’ before committing to a merger - the equivalent of a parent chastising a messy teenager to clean their room or there would be no dinner.

So while the merger ended even before it began, it’s not inherently unsurprising. And while Honda is still a globally recognised and popular brand, Nissan is struggling. And with it, so is Japan’s place in the global auto elite.

So let’s start this issue’s analysis with how the public broadcaster in Japan reported to news.

🏯 NHK: Honda, Nissan decide to end merger talks [link]

📢 What NHK is saying
A brief and factual report on what happened involving all the main characters is the approach NHK has taken. In fact, the article is verbatim what is said in the video that runs above the article. However, in reporting everything factually, it does ever so slightly lay blame of the failed merger on one party more than the other. Let’s have a look at how below.

1. 📸 Visuals

A single video sits above the article. The script of the video is exactly the same as the article that sits below it. However, the video ends just before the article begins to quote an analyst who appears toward the end of the article. In essence, if you read the article, you get the same information as in the video.

The video’s thumbnail shows the Honda-Nissan press conference from December 2024, where the merger was first announced. In the thumbnail, we see both the senior leaders from Nissan and Honda, with the Nissan President Uchida Makoto reading a statement from behind a white podium with Nissan branding above his head. He is wearing a dark grey suit and a dark tie.

The Honda President Mibe Toshihiro stands next to him, also behind a white podium, looking off into the distance. He is dressed in a black three-piece suit, with a light grey tie with white markings, a pocket square, and a pair of black rimmed glasses. There is a pin in the shape of a plane above his pocket square.

Happier times indeed.

2. ✍🏽 Words

The article headline and first paragraph make it clear that both companies have ‘decided’ to end talks of a merger. The article then quickly mentions what they plan to do instead - ‘prioritize the speed of decision-making in a rapidly changing EV market’.

A bit of backstory follows; how the two companies approached merger talks in the face of increased competition from U.S. and Chinese EV companies, initially planning to merge under a separate holding structure before Honda ‘switched strategy’ and proposed a takeover of Nissan instead.

To reiterate the failure of the merger talks, the article mentions that both companies held separate press conferences. This is followed by quotes from the President of Nissan, who says that they lost confidence in the ability to maintain their independence in this merger, while the quote from the President of Honda states that the situation was a ‘win-win’ one if ‘painful’ decisions were made ‘quickly and decisively’.

Mitsubishi gets a mention here, saying that while they will cancel their MOU with the other two companies, they are still open to collaborating on software.

Some finances are mentioned next, with Nissan characterised as ‘struggling’, losing money and also cutting production by 20% and staff by 9,000. On the flip side, Honda is said to have shown a record increase in their operating profits, even if net profits were down due to increased competition from Chinese EVs.

Finally, some brief quotes are included from an analyst, who says that the failed merger talks reflect badly on both companies. Nissan requires a massive investment, and the reason why Honda was interested in this merger to begin with was because it’s business is not very profitable.

❓ What it means
Did you catch it? While the article doesn’t outright blame one side or another for the failure of the talks, it does mention two things:

1. Honda was the one who ‘switched strategy’, which ultimately derailed the whole deal, and

2. Honda’s business is not as profitable as is generally believed.

So in summary, one can read this as Honda was the one who jeopardised the whole deal, and don’t really have a viable Plan B in play for their own business, let alone for the overall Japanese auto industry. While everybody is in agreement with Nissan’s dire financial situation, including Nissan, Honda seems to be unwilling to read the tea leaves about their own business. As the analyst says, ‘Japan’s car companies are in the middle of a once-in-a-century revolution’. Not just Honda and Nissan, but the entire national industry is experiencing an existential crisis.

⚠️ Why it matters
NHK is a public broadcaster in Japan, and cannot be seen to play favourites. The reporting, therefore, is to the point and not sensational. Part of the voice of a national broadcaster anywhere in the world is not to sow panic and confusion amongst its readers. Since the commercial pressures simply aren’t there, compared to private news media, public broadcasters are often the slowest, if at all, to evolve. They are simply required to be factual and timely.

It would not be prudent to read NHK’s reporting on this story as an extension of the Japanese’s government’s reaction to the news, but considering how Honda has been mentioned in the article, it does feel like the government was backing the deal. The success and growth of the Japanese automotive industry is fairly critical to the overall Japanese economy, considering that the automotive industry was almost 18% of Japan’s manufacturing shipments in 2022 according to the Japan Automobile Manufacturer’s Association.

While other countries in the world are lucky to manufacture one major car brand, Japan has eight, including Toyota, Honda, Nissan, Mazda, Suzuki, Subaru, Daihatsu, and Mitsubishi. Consolidation is nothing new in the automotive industry (just have a look at Volkswagen Group), but Japan must be worried about its own automotive industry going the same way as the Europeans (excluding the Germans), where every major brand is owned by an international conglomerate. 

💹 NIKKEI ASIA: Honda, Nissan abandon merger plan after failing to agree on preconditions [paywall]

📢 What Nikkei Asia is saying
Nikkei Asia’s Automobiles section writes in a bit more detail about the resulting failure of the merger. There is more detail from the separate press conferences held by both companies, with further elaboration on the changes in Honda’s proposal, and the overall concerns that both companies face. The article also briefly explains some potential next moves for Nissan, including interest from Taiwanese manufacturing giant Foxconn.

1. 📸 Visuals

The article includes three visuals, and they’re all more-or-less variations of each other. At the top of the article is an edited visual of both brands and CEOs side-by-side. On the left of the image, against a red background, is a picture of the President (and CEO) of Nissan, complete with the Nissan logo in white behind his head. The logo has a shadow effect, lending it a three-dimensional quality. The CEO is looking off to the left, in a dark suit.

On the right of the image, against a black background, is the logo of Honda in blue floating above a picture of the President (and CEO) of Honda, who looks like he’s mid-sentence. He is also wearing a dark suit. The logo is a flat, two-dimensional visualisation.

The second image mid-way through the article is of the President and CEO of Honda speaking at the press conference where he announced the end of the merger talks. He looks a bit upset, with his lips tightly pressed together, head cocked to the right. He is sitting against a white background, with two black microphones emerging in front of him. He is dressed in a dark suit, with a noticeably patterned blue tie and a striking pin of a plane above his white pocket square.

Finally, the third image in the article is of the Nissan CEO from his respective press conference announcing the end of merger talks. The angle of this photo is considerably lower. The upper half of the image shows the CEO sitting at a table in front of two curved microphones, also against a white background with the corner of what we can assume is a screen just behind the top of his head. He is turned to his left and is mid-sentence, also in a dark suit. However, on his left lapel is a pin of the Nissan wordmark, sitting above another pin of a colour wheel.

The entire lower half of the photo shows the Nissan Motor Corporation branding out of focus.

2. ✍🏽 Words

The headline shares a little more detail, saying that the merger talks have been ‘abandoned’ because both parties could not agree to ‘preconditions’. This is followed by a short subtitle that quotes the Honda CEO reflecting on the complexity of the plan against a ‘challenging environment’.

The article then begins with a quick summary of the story, saying that both parties have ‘terminated talks over integrating their businesses’. It then mentions that both CEOs spoke of being very disappointed at the result, even though both agreed to continue their pre-existing EV partnership. The article then establishes a timeline, where the initial announcement was made in December 2024, with a plan to sign the agreement by June 2025, and launch a new holding company by August 2026. The article then gives the reason for the termination of talks - failure to agree upon Honda’s proposal to change the corporate structure from a joint holding company to one of parent and subsidiary.

The reason behind Honda’s proposal is then explained: in order to make ‘speedy and decisive decisions’ under ‘one governance structure’. A joint holding company would have meant more executives from both companies, leading to longer, more complex decision making. According to Honda, this would have been worse than the status quo, even while admitting that such a structure would have been tough for Nissan.

The Nissan CEO is quoted next, saying that he was ‘skeptical’ even if he ‘respected the idea’, but ultimately independence and autonomy for Nissan meant he was against the decision throughout discussions.

Following a brief mention of Mitsubishi cancelling the MOU with the two parties, the article leads into the interest of Taiwan’s Foxconn in Nissan. However, the article takes pains to reiterate that Nissan and Foxconn have not discussed anything meaningful, going as far as saying that Foxconn chairman has stated that he is not interested in a stake in Nissan.

The article then ends with a summary of Nissan’s several commitments to turning their business around, including shutting down a factory in Thailand, and reducing top management positions by 20% to improve decision making efficiency.

❓ What it means
The article spends time explaining, and to some extent justifying, the proposal made by Honda on the new structure, and almost points the finger at Nissan for backing out of the deal, despite all the challenges that the company, and the wider industry, is facing.

The inclusion of the interest from Foxconn is also interesting. In one way, it can be read as if a company like Nissan has options to save itself beyond Honda. On the other hand, the lack of detail and information on Foxconn’s plans can be read as a red herring - simply a distraction. Perhaps more important is that Foxconn is not a car company. Understanding and supporting a car company like Nissan would be significantly more likely by another car company, like Honda. Foxconn’s lifeline, if it even is that, seems self serving at the very least.

The article ever so slightly portrays Honda’s decision making as a realistic and mature response to the existing challenges within the Japanese car industry - after all, faster decision making can only happen with fewer decision makers. Instead, Nissan’s CEO rejected a good deal for selfish reasons. And just to reiterate the positioning of Nissan’s CEO as the stubborn trouble-maker; in the first image at the top of the article, the Nissan logo behind the Nissan CEO’s head almost looks like a pair of bull horns (though this is the conspiracy theorist in me talking).

⚠️ Why it matters
The failure of the merger, while making for interesting news, does not bode well for Nissan, and perhaps the wider Japanese, and global car industry. The message is clear - EVs from China and other markets are selling fast, and traditional combustion-engine manufacturers are not just being left behind, they are being threatened with extinction. In fact, when was the last time you heard of a really buzzy Japanese EV, apart from the Toyota Prius from 25 years ago?

Even in Singapore, which is arguably the most expensive place in the world to buy a car, BYD topped the list for the best-selling car brand in 2024. The image of Japanese cars being well built, reasonably priced vehicles is being aggressively disrupted by Chinese auto manufacturers.

And let’s not forget the Koreans, where Hyundai-Kia, the world’s third largest automaker, have produced some very well received and unique EVs in the last few years, specifically their Ionic line. Then, of course, there’s Tesla.

So while Japanese automakers are suffering from a lack of mainstream consciousness, they are also not part of the innovation discussion. And while their German counterparts still have a stranglehold on large, luxurious vehicles, the Japanese automotive identity is being eroded.

WHAT’S GOING ON? 

🏎️ Honda and Nissan live to race another day. Against each other.

One aspect that is not deeply discussed in these articles is the greater impact on the Japanese economy, expertise, and identity. Let’s be clear: each of the Japanese brands in this story have produced their fair share of legitimately legendary cars. For Honda, it’s the S2000 and the NSX. For Mitsubishi, it’s the ultimate rally driver, the Evo. For Nissan, it’s the GTR - the Godzilla. And that’s just for starters.

Japan and car culture are practically synonymous - the Japanese auto industry has not only given us great brands and vehicles, but also ways of driving, like drifting (remember Tokyo Drift?). And Japan is also a regular fixture on the annual F1 circuit, where Honda has been supplying engines to the relentlessly dominant Red Bull Racing team and quadruple world champion Max Verstappen. Quality from Japanese manufacturers is not in doubt.

NHK (who called both executives as President) nudges the finger of blame towards Honda, and Nikkei Asia (who called both executives President and CEO) flexes the finger of blame towards Nissan (in a follow up article, it says as much). Honda, irrespective of the media, is reported as the senior partner, with the Honda name coming before Nissan’s. Surprisingly, in the lead visuals for each article, Nissan is shown first.

Regardless, the coverage of the story across media is that Japanese automakers cannot compete globally like they used to.

The truth, as always, is somewhere in between.
Read widely. Question thoroughly. Decide accordingly.

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Was this forwarded to you? Signpost is a free weekly newsletter analysing what the media says, what it means, and why it matters. It’s free to subscribe. Alternatively, you can add me on LinkedIn.