Why the Honda-Nissan merger was doomed to fail

Supplied/Nissan

Fifty-three days – that’s all it took for the largest automotive merger in Japanese history to implode, leaving Nissan and Honda to walk their separate, uncertain ways. 

While it is not the shortest celebrity coupling in history, it just goes to show how true love is hard to find, especially among embattled automotive manufacturers in need of a bailout. 

Note that this description only really applies to one half of the unlucky couple. Nissan was the striver in this relationship, coming off a torrid November in which its annual operating profit sank by 70 percent, forcing it to begin cutting 9,000 jobs globally and halve CEO Makoto Uchida’s take-home pay. 

This situation may especially mystify Middle East Nissan watchers, where the Japanese automaker is a top player.

Just how good are Nissan’s UAE sales? Put it this way: on an average given month in 2024, Nissan sold more than 1,000 units of its much-loved family wagon, the Patrol. That is almost double the number of units sold of Honda’s entire UAE lineup. 

So, how did things get so bad for Nissan? In one sense, Nissan can blame its ex. 

Automotive watchers will recall that the former Nissan chief executive and chairman Carlos Ghosn was dismissed from his position in 2018 amid claims of financial misconduct. Ghosn, while denying the charges, fled to Lebanon, where he remains an international fugitive to this day. 

Whether or not the allegations are true, he was also responsible for Nissan’s last financial turnaround, in the early 2000s. 

At the time, Nissan made too many vehicles that consumers did not want in markets with plenty of other choices. For instance, in the US, Nissan was late to the party in building a profitable pickup truck. At the same time, its midsize Altima saloon lagged far behind the market-leading Toyota Camry and Honda Accord. 

Like a determined villain in a slasher film, Ghosn took an axe to Nissan’s hidebound structure, chopping plants, jobs and suppliers, and reducing real estate and shareholdings. Within three years of creating the often-shaky Nissan-Renault alliance, he had returned Nissan to profit. 

So why didn’t this lead to a happily ever after? For the exact same reason that Nissan never successfully merged with Renault

In the Middle East, Nissan also underwent a huge investment in marketing and a corresponding jump in market share, peaking at 23 percent of the overall market in the year of Ghosn’s ousting. 

Now, in 2025, there is no Ghosn to make the tough calls to lead Nissan out of its latest financial quagmire. 

Once again, the company finds itself far behind the global eight-ball, selling a stagnating electric lineup that could not compete with Tesla for desirability or with fast-innovating Chinese makers such as BYD for technology.  

Firing up the dating apps, Nissan turned to the other shy coquette on the dance floor, Honda. On paper, it’s a total, complementary match. 

Honda’s China sales are also crumbling under the assault from BYD and it desperately needs to catch up on EV technology. Nissan has a head start in that arena. 

Honda’s hybrid cars and SUVs are both highly regarded and bestselling, exactly what Nissan could use in markets such as the US, where hybrid sales have increased by 31 percent year on year. 

Nissan trucks and SUVs could give Honda a powerful surge in regions including the Middle East, where the latter barely qualifies as a minnow. 

All in all, a combined Nissan-Honda would have become the fourth-biggest carmaker in the world and a powerful force to be reckoned with. 

So why didn’t this lead to a happily ever after? For the exact same reason that Nissan never successfully merged with Renault – a long, storied past means it now has a hard time accepting business reality. 

Honda is both larger in headcount and wildly more successful than Nissan, with a market cap more than four times larger, at around $43 billion. The size mismatch gave Honda’s CEO, Toshihiro Mibe, far more muscle to make demands for cuts to Nissan manufacturing and jobs. But this was a request too far. 

In effect, the once-mighty Nissan would have become a Honda subsidiary.

Given that stark choice, Nissan’s management dragged its feet until Mibe finally called off the talks altogether. 

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Both companies share a Japanese heritage but otherwise have wildly different corporate cultures. Honda is resolutely macro-focused and engineering-led, while Nissan was overambitious, attempting to become the biggest automaker in the world without sound underlying fundamentals. 

What next for Nissan? China’s Foxconn is considering a “partnership” with Nissan. This is especially interesting, considering the technology giant had previously desired to acquire Nissan outright. 

Perhaps the tumultuous courtship with Honda has given the Chinese cold feet and they are prepared to play the long game and wait for the dominos to tumble. 

Meanwhile, Honda continues to muddle along in the UAE market. Where in 2008 it once claimed 7 percent of the overall market, today it sells just over 1.4 percent – vastly outperformed by Chinese brands such as Jetour and MG. 

Luckily, Honda continues to prosper in the US, Japan and Southeast Asia. Like Toyota, it is stable, conservative and unlikely to falter long term. One day, its prince will come. But he won’t go by the name of Nissan. 

Imthishan Giado is a partner at Motoring Middle East