Humbled Nissan gets new CEO — but does Honda still have urge to merge?

That big Nissan and Honda merger might get another chance.

As I wrote here, the deal fell apart last month. This was especially bad news for Nissan. Thanks to falling sales and high debt, the automaker is in desperate need of a turnaround.

Honda — much like President Trump in his recent negotiations with Ukrainian president Volodymyr Zelenskyy — holds all the cards here.

It was also bad news for Nissan CEO Makoto Uchida, who took the blame for the stalled talks. He is now out. New boss Ivan Espinosa — a real car guy, by the way — may very well revive the merger.

A Nissan veteran to the rescue

Espinosa joined Nissan in 2003 as a product planner in the brand’s Mexican division. He’s held a dozen positions within the brand since, so he brings a massive amount of experience to the CEO’s office, but the problems that he will need to solve are massive as well.

We recently talked about Nissan’s challenges and that insiders admitted that the company had “12 to 14 months to survive” if it didn’t find an investor, as executives announced plans to slash 9,000 jobs and reduce the group’s global production capacity by 20%. Nissan is facing headwinds in the United States and China, two of the biggest markets in the world.

In China, Nissan is among the many global carmakers that have lost ground amid a cutthroat price war and consumers’ shift away from conventional gas-powered vehicles. Its global sales in January fell 5.9% from a year earlier.

A year to live

The merger with Honda blew up, and it still hasn’t found an investor. In theory, Nissan now has less than a year to live. So what’s next?

What Uchida’s resignation means for the canceled merger with Honda isn’t clear yet. Talks could continue after April 1 when Espinosa steps in. The original merger or alliance would have placed Honda and Nissan on equal footing in spite of the vast differences in size and revenue that separate them.

Mitsubishi, which Nissan has a 24% stake in, had decided not to get into the merger. No word if it will reconsider should talks start back up.

Ghosn but not forgotten

Let’s reflect on Nissan for a moment.

In 1999, the ailing company turned to a non-Japanese chief — Carlos Ghosn — for a cure. Ghosn, who was born in Brazil and grew up in Lebanon, went on to serve as chief executive and chairman before he was arrested in Japan in November 2018 and charged with financial crimes that he continues to deny.

Jailed for months, Ghosn eventually fled Japan a little more than a year after his arrest.

The company’s stock price and global sales sank during the whole affair and haven’t recovered since.

Pride goeth before ... a comeback?

I believe that the Japanese government put pressure on Honda to make this merger work in order to save face. Japanese culture is very proud, and the government would prefer a merger versus a potential failure. The impact of such a failure would be a blow to the Japanese economy — and could have a global impact.

On the other hand, a Honda and Nissan merger would farm the world’s third-largest carmaker, behind Toyota and Volkswagen. Toyota has a partnership with Mazda and Subaru, which are Japanese brands.

Honda — much like President Trump in his recent negotiations with Ukrainian president Volodymyr Zelenskyy — holds all the cards here. It can make or break this possible merger, and Nissan is in no place to make any demands. If Nissan wants to survive, it needs Honda's money and business guidance.

Staying afloat

How would that look?

It’s not terribly far-fetched to imagine that Nissan could use Honda’s technology to fast-track hybrids and plug-in hybrids, or that Honda might get some truck experience from Nissan. But this is speculation — at this point, the merger is the life preserver Nissan needs to stay afloat.

Insiders familiar with the past negotiations reported that what started as a merger of equals turned into a full-on takeover by Honda, which is worth nearly five times more than Nissan and in much better financial shape.

Nissan refused to become a Honda subsidiary, quickly ending the conversations. Since then, Taiwanese company Foxconn — best known for building iPhones for Apple — has been circling the company. But so far, its interest hasn't amounted to much.

With Nissan's situation only getting more dire, it may not be so proud this time if it gets another shot with Honda.

We'll be watching to see how Espinosa handles this.