Nissan Struggles: Merger with Honda May be Only Way Out
Nissan, the Japanese automaker, is facing unprecedented challenges in its largest market, the United States, as well as in emerging markets and China. The company’s operating profits dropped 90% and net income dropped 94% in the first half of fiscal year 2024, compared to the same period a year earlier.
The company is struggling to compete with rising Chinese automakers and has fallen behind in the global electrification race. Furthermore, it has made missteps in the U.S. market. A recent report from the Financial Times suggests that Nissan may only have 12 to 14 months to survive.
To address its challenges, Nissan is shuffling several executives, cutting 9,000 jobs, and slashing production by about 20%. The company’s CEO, Makoto Uchida, is even reducing his monthly compensation by 50%, with other executive committee members expected to take similar cuts.
Despite its struggles, Nissan still has some strengths. The company has six models for sale in the U.S. that start below $30,000, which sets it apart from its competitors at a time when the average transaction price in the U.S. is close to $50,000.
“I think that the strength of Infiniti and Nissan are sufficient to survive this, particularly if they can get a partner,” said Alan Haig, founder and president of Haig Partners, an investment bank that facilitates dealership acquisitions. “A merger with Honda, for example, may be their best shot at survival.”
Industry analysts agree that a merger with Honda could be Nissan’s only way out of its current crisis. “These are desperate measures,” said Felipe Munoz, global automotive analyst for JATO Dynamics. “They were not prepared for this new reality after the pandemic and after the semiconductor shortage, which put the Chinese carmakers almost at the top.”