The greatest superpower available to any mortal human might be the ability to overcome one’s insecurities. With enough confidence, you’ve got a decent chance of accomplishing a few things. Nissan is a company seemingly defined by its own insecurities — a business with no faith, only fear, and we all know that fear is the mind-killer.
Another Dune reference in The Morning Dump? Yes. If you’d like a Frank Herbert-free car news roundup you can write your own blog, with blackjack and hookers. I have to start the day with the big news from Asia that Nissan is bungling the Honda merger before it even got started.
Nissan isn’t alone! A key measure of Germany’s car industry found that most businesses think they’re uncompetitive. That’s nicht gut, but there are reasons for hope. Toyota reported a 28% drop in quarterly operating profit, mostly due to production woes. The future still looks bright for Toyota and, especially, its luxury arm Lexus.
Nissan Wanted To Be Treated As An Equal, But It Is Not An Equal
William Gorham is a footnote in Nissan’s history. If you go to the company’s English language heritage site you’ll find one reference to him from 1919:
William R. Gorham, an American engineer, developed a three-wheeled vehicle in 1919. This drew attention from a businessman in Osaka, who established Jitsuyo Jidosha Co., Ltd.. The mechanical equipment, auto parts, and materials were ordered and imported from the United States.
Jitsuyo Jidosha Co. was a modern automobile factory of the time.
That’s not much to go on, and you’d assume it was a weird little quirk in the company’s history. The funny American engineer who came to Japan to build airplanes and created a little three-wheeler. Other sources paint a slightly broader picture, with Gorham being responsible for bringing the production know-how from America to Japan. That little three-wheeler eventually became a four-wheeled car that helped establish what would become Datsun and, eventually, Nissan.
Here’s another reference from Choong Kim’s “Japanese Industry in the American South” via a small history of Gorham:
[I]f the Japanese [people] had been too ingrown to learn from William R. Gorham, the American electrical engineer who is considered the founder of the Datsun (Nissan) motor company in terms of technology, Nissan might not be the success we see today.
Journalist David Halberstam in his book The Reckoning, about the car industry, takes it further, writing that “[t]he earliest teachers at Nissan had been Americans, most particularly an exceptional man named William R. Gorham. In terms of technology, Gorham was the founder of the Nissan Motor Company.”
That is an American viewpoint, and many, many things had to happen in order to create Nissan. I don’t want to diminish the key contributions of people like Yoshisuke Aikawa or Masujiro Hashimoto. I do think it’s a bit of a tell that Nissan makes this offhanded reference to the role of Gorham and seems to leave it at that.
Nissan has had good years and bad years, like any company, but it’s been a company more defined by its bad ones. The ultimate bad period came with the bursting of Japan’s asset bubble in the late ’90s. The company was creating some amazing cars and, yet, it was in terrible financial shape. Nissan had to get bailed out by Renault and, worse, had to accept a bad deal that put too much of the control of the company in French hands.
The company was, according to a lot of reporting, always worried about submitting to Renault. As a CEO, Carlos Ghosn restored some of Nissan’s pride, and the company, for a while, seemed to be going in the right direction. However, depending on who you believe, Japanese Nissan execs feared that Ghosn was going to move to bring Nissan fully under Renault.
Ghosn was arrested, famously, and Nissan eventually got its separation from Renault. Unfortunately, without Renault, Nissan is yet again in a bad way and a target for a takeover. It was concern that Foxconn could buy Renault’s remaining stake in Nissan that allegedly caused the Japanese government to strongly suggest to both Honda and Nissan that the two companies consider merging.
I have thought this was a good idea for a while, mostly because it would create one big automaker instead of three smaller ones (if you include Mitsubishi). The catch, as always, is that Nissan is overestimating its bargaining position. This came to a head recently and, according to Nikkei Asia, Nissan is likely going to walk away from a merger. Why? The most obvious sticking point is that Nissan is supposed to restructure itself and, thus far, has been conservative in its restructuring.
But there’s more:
The valuation of the two sides was also an issue. According to a joint statement in December, Nissan and Honda planned to establish a joint holding company by share transfer that would be the parent company to both.
The share transfer ratio was to be determined “with reference to the average closing prices of each company’s shares over a certain period prior to the announcement of the MOU.” The negotiations on a share transfer ratio were expected to start at around 5-to-1, according to a Nikkei tabulation, which significantly cut Nissan’s influence in the new company.
Honda judged that it would take time to rebuild Nissan and discuss the exact integration ratio, and it approached Nissan with a proposal to make it a subsidiary as a way to speed up restructuring. But Nissan — which sought a near-equal role in the merger — became increasingly confrontational.
You can’t have a merger of equals if one company is so much less equal than the other one. It would be hard for Nissan to swallow the idea of being a subsidiary, but it’s the move that makes the most sense right now. This is especially true as the threat of tariffs lingers and Nissan, at the moment, makes about 25% of its cars in Mexico.
Since this news broke, Honda’s share price has gone way up and Nissan’s share price has gone way down, which is as clear a statement of how this news should be viewed as I can imagine.
Germany’s Auto Industry Doesn’t Feel Great About Germany’s Auto Industry
You know it’s bad news when I pull out the “guy working at Volkswagen factory in Germany” photo. I use this photo so often that we should probably give him a name. I’m open to suggestions.
Sentiment in Germany’s automotive industry reached a new low in January, as companies fret about their ability to compete, highlighting the challenges facing carmakers from BMW AG to Volkswagen AG and suppliers including Continental AG.
A business climate gauge by the Ifo institute slumped more than five points to minus 40.7 last month, the Ifo economic research institute said on Wednesday. Companies assessed their position on foreign markets as lower than ever before — both within and outside the European Union. They have also lost ground “significantly” on the German market, Ifo said.
The first step is admitting you have a problem!
Toyota’s Operating Profit Drops 28% As Toyota Can’t Build Cars Fast Enough
Toyota didn’t make as much money last quarter (4th by the calendar, 3rd by the Japanese fiscal calendar) as it would have probably liked, though it remained profitable. What’s the issue? Toyota is having trouble keeping up with demand, so any snag in production is going to hit the bottom line.
Before its earnings retreats — first in the June to September period and then October to December — the last time Toyota booked a quarterly reversal in operating profit was in the July to September period of 2022, as the carmaker grappled with pandemic supply chain shocks.
In the latest October to December quarter, operating profit dropped 28 percent to ¥1.2 trillion yen ($7.8 billion), from ¥1.7 trillion yen ($10.7 billion) a year earlier. Operating profit margin declined to 9.8 percent in the quarter, from a robust 14 percent the year before.
Factory slowdowns in the key manufacturing hubs of U.S. and Japan put the brakes on sales and drove up costs due to idle time. Global output fell 5 percent in the quarter as Toyota gradually recovered from quality and vehicle certification problems in the U.S. and Japan.
It’s going to be fine. It’ll all be fine. Toyota has a plan to build more hybrids, which is what everyone seems to want these days.
Toyota’s new battery plant in North Carolina coming onboard will be a big part of this CFO Yoichi Miyazaki said during the announcement of the Q3 results:
We are working to ensure production flexibility such as through common usage of batteries for BEVs and PHEVs so that we can respond to customers’ needs regardless of what products they choose. Because we will ultimately need to internalize production technology for aptly mass-producing different types of batteries in the same plant and buildings, we made battery manufacturer Primearth EV Energy our wholly owned subsidiary, and it began operations as TOYOTA BATTERY in October 2024.
Cool stuff.
Lexus Owns The Luxury Hybrid Segment
I love this graphic from S&P Global Mobility that shows luxury registrations in the United States per quarter. You can get a sense of how much Tesla has grown and, at the same time, how much the Mercedes approach of focusing on EVs hasn’t worked out as well as Lexus’s hybrid approach.
S&P explains in some detail how this happened:
Nationally, hybrids comprised 13% of all new US retail registrations in the first 11 months of 2024, an increase from 10.3% the year prior. Meanwhile, electric vehicles accounted for 9.1% of registrations, up from 8.4% a year ago. In November 2024, the hybrid share jumped to an all-time monthly record high of 15.3%.
Lexus has been able to take advantage of this surge in hybrid popularity by marketing hybrid versions of its most popular models. In particular, the RX accounts for more than half of all new retail registrations in the upper midsize luxury utility segment, and 20% of these RX registrations are hybrids.
[…]
A list of the 15 most popular luxury hybrids through the first 11 months of 2024 illustrates Lexus’ strength in hybrids (see below). Six of these products are the Lexus brand, versus three Mercedes-Benz products and just one BMW.
The six Lexus models together accounted for more than 4 of every 10 luxury hybrids registered in November 2024 as well, a dominant and impressive performance given that 35 luxury hybrids had at least one registration in November.
Also, I forgot how well the Volvo XC90 hybrid sells.
What I’m Listening To While Writing TMD
Autopian reader Crank Shaft suggested “50 Ways to Leave Your Lover” by Paul Simon as a good song for the Nissan-Renault divorce, and it seems fairly apt for Nissan-Honda-Mitsubishi as well. [Ed note: Ahem]
The Big Question
What is Nissan going to do now?
Photo Credit: Honda/The Three Amigos
Hans Fahrvergnügen
Nissan is going to fail.
VW factory guy looks like a Berry to me. Berry Hossenfefferschnitzelwurst. But his friends call him “Dingle”.
There’s little love for Nissan around here, some of it is deserved, but they do actually make an ok product. Yes the CVT transmission debacle killed their reliability but their current products resolved this. Of the 3 Japanese companies I actually like their design language the most, but that’s subjective.
However, when you only have months left on the clock it’s time to try MOVING cars. Out of curiosity I went to their website and there are no great deals to be had. I suppose it’s a double edged sword at this point because they have to make money on each unit sold but they’re trying to get 3.5%+ apr for financing incentives. That seems wildly high given their situation but perhaps I’m just missing something here. I figured they’d have 0.9% on all models by now…
Ok fingers crossed the merger continues to fall apart!!!
I’m feeling it’s Klaus Essenwurst.
VW guy is the human Bob the minion.
How about “Vilhelm Wagner”? Vilhelm is fun to say, Wagner means “builder of wagons and carriages”. And it makes his initials VW. Job done!
Seems obvious to me that the VW guy would be named Otto.
My name is Otto, I like to get blotto.
You can do it Otto! Even if you’re blotto!
I toured the Audi plant in Neckarsulm several years ago. Workers in the break room were downing large mugs of beer!
Good. This merger never made any sense from a business perspective, no matter what Matt says. Saddling a successful automaker with two crappy ones just to avoid China getting their hands on them is a great way to end up with three Chinese automakers when they all fail.
Foxconn is from the other China, the one we either like or are ambivalent towards
The other China indeed.. but for how long?
Nissan had to get bailed out by Renault and, worse, had to accept a bad deal that put too much of the control of the company in French hands.
How was that a bad deal !? Renault did not absorb Nissan, and 25 years after being nearly bankrupted they are still an independant company ! Have you seen the fates of Chrysler, Mitsubishi, Rover, Saab, Volvo ? The Alliance with Renault was clearly beneficial to Nissan, and they are mostly responsible for their own problems.
-on the hybrid side, the ePower system is clearly shitty for any market outside crowded asian cities. Renault’s one or even Mitsubishi’s would be much better for the US, but they refuse because of their pride
-on the EV side, Nissan created the Leaf. Renault developped the ZOE independantly, but used Nissan’s experience to not repeat some errors. Did Nissan use this experience for the Leaf 2 ? Nope, it was almost technically identical to the first gen. They had to wait until the Ariya to share a platform with Renault, and logically it is mostly a spiritual child of the ZOE : cooled battery, NMC cells, electrically excited rotor. And since ? Nissan has still only the Ariya (and the key Sakura in Japan). Renault launched the Mégane, Scenic, R5 and presented the R4 and a near definitive Twingo. And they have the Spring too. What was Nissan doing ?
The only reason why Nissan did not get taken over is seventeen years of Nissan executives fighting Renault over that. They even asked the Japanese government to tell Renault to back off. While Renault never did get to use them like a skinsuit Ghosn did still manage to use them to fund Renault. Cars like the Clio III/IV RS and ZOE would not exist without the money and technology taken from Nissan.
Without Nissan funneling money towards Renault after 2005 when the Altima, Rogue, and Murano starting selling in volume Renault would have struggled through the 2008 crash and the resulting European recession that lasted until 2013. PSA only barely survived thanks to a bailout from the French government, and they were doing better financially than Renault were. Renault were strong in 1999 when they bought Nissan’s shares because they had just been released from being partially nationalized in 1995 and investors were throwing money at them because the French government had captured nearly half of all French car production with the company. By 2003 it was obvious everybody who gave Renault a throne was wrong as they fucked up with managing their Romanian and Turkish operations and made the stupid decision to sell their heavy trucks business to Volvo.
Now, Nissan was also stupid. They isolated many of their markets, producing vehicles unique to Japan, the Philippines, the UK, Europe, and North America. They had too many extras made to exploit bubble era microniches hanging around by 1999, including the Laurel, Cima, and Almera. They also did the infamous “money on the hood” thing in the U.S. which cut up to a fifth of the price right off a car, resulting in D21s, Maximas, and Sentras being sold at an absolute loss for the company. But they were still excelling at engineering, and were trying all sorts of things to get that engineering into the public’s hands… Unfortunately in very stupid ways. Let’s not forget the VK45 which was only sold in one car for years, or the fact that they never marketed the ATTESSA-ETS system used in the G35x and M45x and expected dealers to do that for them. The VK, ATTESSA-ETS, and the new pressed instead of welded unitized body structure of many of their cars were all things they started before Ghosn stepped in, but he gets credited with saving them via the Nissan Revival Project because he threw some money at them to get these things to market.
I highly suspect that Nissan would have had to retreat to smaller markets by the late 2000s the way Daihatsu and Suzuki ended up doing had the Renault money not come in. But I also suspect the company would not be the neglected shitshow it is now. Of course all this only comes in retrospect, but we now can see that it was in fact a bad deal.
Well, maybe Nissan is looking to shift gears, but they can’t because…you know…CVTs?
Wait…….the VW factory worker isn’t Carlos Tavares? Damn, I was hoping he had landed on his feet after the sacking.
“guy working at Volkswagen factory in Germany” is named Sven. Hi, Sven!
I hope he’s doing well!
How long till we can quit pretending Teslas are luxury cars?
Wait, a pleather couch and iPad aren’t considered luxury?
Name the guy Wagener
I’ve said it before and I’ll say it again:
Honda does not need Nissan – Nissan needs Honda.
Honda is better off walking away, letting Nissan fail, then picking up the pieces that are desirable to it’s future growth – minus the headaches of dealing with Nissan people who view themselves with much more importance than is reality – in the resulting fire sale.
This right here would be the smart business approach to this. But the Japanese are unlikely to allow that to happen.
I expect this to go just as smoothly as DaimlerChrysler.
Herbert Mannaustdieost
CES 2030: The debut of a sea of previously unknown Chinese companies who have licensed the Nissan brand to slap onto smart toasters, electric tooth brushes, skateboards, Bluetooth speakers, massage chairs and power tools.
Sure, “licensed.” Right.
Make Nissan the new Westinghouse, basically?
Kodak, Polaroid, Magnavox, RCA, Philips…
Vivitar and Bell + Howell are in there, too. And I think someone was using Philco at one point
A Honda Accord was within sight until Nissan Juked.
Or perhaps this was just a Prelude to a merger with Maxima value to both parties! But hey, I’m not exactly a well-Versa’d on this particular mergers and acquisitions Odyssey.
They really are on a Quest to find a higher Ridgeline for their stock prices, but I’m not surprised they already went Rogue at this Crossroad while they try and Fit their Cube into Today’s Element.
Don’t you mean, “withInsight?”
Nissan seems to be screwing up the Honda merger in the most Nissan way possible…
Has Nissan already stolen money from Honda to buy meth? And then pulled over and searched for said meth? And when Nissan pulled over, did they scrape the front bumper cover on a tall curb? And did that bumper fall off? And when they were on trial for the above, did they escape prosecution by smuggling themselves out of the country in a large music equipment box?
Cause that would be the most Nissan way I could think of.
What’s Nissan going to do? Beg the Japanese government for a low interest loan or loan guarantees, and sell off or mortgage anything they can. And, if that fails, maybe try find a merger partner from outside the auto industry that can bring the same financial benefits as Honda without the actual industrial synergy
Penske should buy them and become the ultimate rental car manufacturer. Sort of like Checker Motors being a taxi manufacturer that mainly sold cars to the Checker Taxi company.
That is brilliant. They can bring production to 3 models. Altima, Rogue, Pathfinder. All in base model trim. Perfect for the rental fleet operator.
Meet Kristian. He’s 41 and lives in an apartment in Braunschweig with his cat, Moritz. His engagement with girlfriend Sabrina fell apart a couple of years ago, but he’s doing ok. Denk-Bar isn’t too far from his apartment, where the beer is fairly cheap and he can watch Eintracht Braunschweig matches surrounded by fellow supporters.
Sabrina promptly left him when she learned of his existence as the poster child of German manufacturing on this weird US automotive site.
Didn’t stop Elise (NHRN)!
In her defense, she made it very clear she had no interest in being in the public spotlight, which was impossible thanks to Kristian’s rise to Autopian fame.
Damage report!
Guidance system out. Auxiliary steering system out.
Defense! Defense!
She won’t answer the helm. We’re locked into the moon’s gravitational pull. What do we do?
{Mechanical monical flips into place} We die.