Investors have been keenly watching both Honda Motor Co Ltd (TYO: 7267) and Nissan Motor Co Ltd (TYO: 7201) ever since the two legacy car companies announced plans of a merger to create the world’s third-largest automaker.
According to Carlos Ghosn, however, Nissan will be on the losing end of such a transaction as Honda will undoubtedly be in the driver’s seat following the merger scheduled for the back half of 2026.
“It’s very sad to see that they’ll be the victim of a carnage, because there’s total duplication between Nissan and Honda,” he said in a recent interview with CNBC.
Ghosn served as the chief executive of Nissan for 14 years from June 2021 to April 2027.
Why is Carlos Ghosn against Nissan-Honda merger
Industry veteran Carlos Ghosn is against a potential merger between Nissan and Honda as a lack of complementarity will likely see them resort to cost reduction to make synergy.
“And we know exactly who’s going to pay the price of it. It’s going to be the minor partner, it’s going to be Nissan,” he argued on Squawk Box Europe.
Nissan would have been better off exploring a merger with Renault as it has better synergies with the French automaker, Ghosn added.
Carlos Ghosn played a central role in forming the Nissan-Renault-Mitsubishi alliance in 1999. The partnership between the three automaker, however, has undergone significant restructuring in recent years.
Honda stock has rallied on Nissan news
On the flip side, Ghosn’s concerns might actually be good news for Honda investors.
After all, if Honda and Nissan, together, emerge as a much stronger entity within the automotive space – and Honda gets to drive that entity, its shares will likely succeed in commanding a premium over the next few years.
That’s part of the reason why Honda stock has rallied a whopping 20% ever since it formally engaged with Nissan over a potential merger.
Honda shares pay a rather lucrative dividend yield of 5.1% at writing that makes up for another good reason to have them in your portfolio.
Nissan is struggling with losses
Nonetheless, a potential merger with Honda could still mean a lifeline for the embattled Nissan.
The automaker lost 9.3 billion yen ($62 million) in its latest reported quarter and significantly lowered its full-year guidance in November.
Nissan announced plans of trimming its global production capacity by 20% at the time as well. Its chief executive Makoto Uchida told investors last month:
Nissan will restructure its business to become leaner and more resilient, while also reorganising management to respond quickly and flexibly to changes in the business environment … and set Nissan back on a path of growth.
Nissan stock does not currently pay a dividend.
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