Why Honda Is Making Nissan Merge Right Now

The news of a potential Honda-Nissan merger, aka Nissonda, isn’t news to anyone who reads The Morning Dump. I’ve been calling for Nissan and Honda to merge since August. The rest of the world woke up to the possibility yesterday and I held off on writing about it because what was missing from those reports was a good explanation of why right now.

This morning we got a little insight into the other company that was looking to buy the Nissan and why that might scare the crap out of Honda. You know what scares the crap out of me? The lack of air traffic controllers. Perhaps I’ve just watched too much Breaking Bad.

Every year it was a requirement to go to the Detroit Auto Show if you wanted to know what was happening in the automotive world. Lately, that hasn’t been the case, but Detroit is making a real attempt to shift toward a more consumer-centric show. And, finally, a car movie made by some friends is now available on Amazon to watch.

No One Wants The Foxconn Guarding The Nissonda House

It’s been clear that Nissan has been in trouble for a while, never quite finding its footing after having its CEO Carlos Ghosn arrested and separating from Renault. Nissan has struggled in China, like most non-Chinese/non-Tesla automakers. The company’s products haven’t been particularly competitive in the United States, either. Like Stellantis, there’s a lot of value there, but it’s not clear how that value could be tapped.

The suspicion was that Nissan had roughly until the end of 2025 to get its act together, which involved the increasing likelihood of a Honda-Nissan merger. Japan has, effectively, three automaker groups: Toyota and its affiliates (Suzuki, Mazda, Subaru), Honda, and Nissan-Mitsubishi. If you combined Nissan, Honda, and Mitsubishi you still wouldn’t have an automaker as big as Toyota on its own by market cap, but you’d have something a little more competitive by size at least.

In this “Darwinian period” of the automotive world, as Carlos Tavares called it, maybe Honda is big enough to survive on its own, but it would be a lot easier if it could add some scale from a tie-up with Nissan-Mitsubishi. More importantly, the three companies could work together to try and battle a growing threat from Chinese automakers in China and, increasingly, everywhere else.

Elon Musk has said that the future is just going to be Tesla and a handful of Chinese automakers. Would he include Hon Hai Precision Industry Co. (aka Foxconn) on that list? The Taiwanese mega global manufacturer makes about 40% of the world’s smartphones and now wants to build about 40% of the world’s electric cars.

The company hired Nissan exec Jun Seki to oversee its EV plans, and Seki told Bloomberg about the timeline:

“We never give up, 5% is the first step we have to achieve,” said Seki, and the ultimate aim is to garner a share as large as Hon Hai has in smartphone manufacturing, as much as 40% or more.

To date, Hon Hai has only won corporate customers for its EV manufacturing at home in Taiwan. It ventured into the EV assembly business in 2020 as then-new Chairman Young Liu, who took over from founder Terry Gou, was looking for new cash cows.

How Foxconn planned to do this has felt a little opaque to me. It purchased the former GM Lordstown Assembly and was going to build Fiskers, and maybe Scouts, but those plans obviously haven’t worked out that way. Seki said that Lordstown will take about five years to ramp up EV production, though for whom I’m not sure.

Perhaps for Seki’s old company Nissan? Asia’s Nikkei news service kicked off a new round of chatter about Nissonda happening, with little explanation for the urgency. This morning came a clear explanation from the news site:

As of September, 22.8% of Nissan shares were held by trust banks, and Foxconn appears to have been interested in these shares in order to have an influence in Nissan’s business.

When Nissan became aware of Foxconn’s moves, the struggling automaker held behind-the-scenes talks to hammer out ways to defend itself.

Uh oh! Nissan didn’t really want to be owned by Renault and the company’s leadership would probably be happier not merging with Honda. It clearly sees Foxconn as the worst of all worlds as Foxconn is looking to make money and would likely dramatically cut back what the company does.

According to this report, Honda wouldn’t go through with a Nissan partnership if Foxconn ended up taking over the company. This makes sense. Honda is trying to merge with Nissan in part to protect itself from new competitors that can make cheap cars on a massive scale. If Honda handed more of its technical know-how to Nissan it would effectively be passing that information to Foxconn.

Again, from the Nikkei article.

In December, Foxconn accelerated its under-the-radar activities, and Nissan received information that Foxconn’s Seki was planning to meet with Renault CEO Luca de Meo in Paris.

“It would not be surprising if Foxconn approached [Renault] about acquiring Nissan shares at that meeting,” a Nissan official said.

Now the timing makes sense. Would Nissan and Honda really work? That’s a fair question and columnist Antony Currie points out that a merger isn’t always a slam dunk:

A well-executed merger could buy Nissan and Honda time not just to slash expenses but to bolster their subpar portfolio, not least of electric and hybrid cars. Stellantis shows that if executives don’t focus on producing vehicles customers want to buy at prices that keep shareholders happy, any union is likely to careen off the road again.

This is true, though Nissan, Mitsubishi, and Honda don’t have quite as much overlap as you’d think, and Stellantis was way too many brands being combined at once. I’m hopeful that a mixture of cost-cutting, streamlining, and a renewed product focus for Nissan could work out for everyone.

Jet Blue CEO: Air Traffic Control Is ‘Grossly Understaffed’

Here’s a little secret: I switched from being a mostly Delta customer to a mostly JetBlue customer. I think Delta service is, in general, better, but it was too hard to maintain status at my diminished level of flying. No one wants to be the 900th person in line for an upgrade and Delta is clogged with business travelers now.

JetBlue is more focused on travel/leisure flyers who don’t fly as often, which means that status is easier to attain and use. I just leveled up to Mosaic status for next year and I didn’t even fly that much this year.

So, when JetBlue’s CEO Joanna Geraghty talks, I’m going to listen, because that’s how I plan to get around most of next year. And right now she’s complaining about ATC.

Per Bloomberg:

“I wish this administration would focus more on air traffic control,” Chief Executive Officer Joanna Geraghty said in a Bloomberg Television interview Tuesday. “That has definitely been a meaningful pressure for JetBlue and other airlines.”

The nation is “grossly understaffed” in air traffic controllers, she said, and “we should be able to have a more resilient air traffic system.” JetBlue and other carriers with large operations in the New York area have been particularly hard hit by the shortages.

Yikes! Let’s get this fixed.

The Detroit Auto Show Is Back In January Where It Belongs

I have a great affection for the Detroit Auto Show and miss having a reason to go every year. It was fun to bop around seeing everyone, getting drinks at the Firehouse, and watching Kim Cattrall get paid to flirt with Dr. Z.

Now that the Detroit Auto Show is back in January, the hope is it’ll reclaim a little bit of its past glory. From this Automotive News article it sounds like it’ll be mostly local dealerships providing inventory, though Ineos, Rivian, and the Detroit 3 will be there:

“There’s absolutely been a shift if you compare where we were 15-20 years ago, and then, obviously after COVID,” Klemet told Automotive News affiliate Crain’s Detroit Business on Dec. 17. “But actually, I’m pretty encouraged by this, and here’s why: We are a consumer-focused show. We want to make sure that the people that come down to the show, more than ever, are the people that are looking to buy cars, that are interested in buying cars, that love cars in general, and so to create an experience for them that taps into those passions is critically important for us.” Corporate-sponsored brands for the upcoming show include Alfa Romeo, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Fiat, Ford, GMC, Jeep, Kia, Lincoln, Ram, Toyota and Volkswagen.

I hope it’s a huge success and everyone goes back to Detroit next year in January.

Go Watch ‘Edith’ On Amazon Prime

I’ve had a job as both a secret-teller and a secret-keeper, and between the two I think I’d rather be a secret-teller. That made my last job at TV/film/video production company TangentVector tough sometimes. The company works for a lot of automakers and often ends up seeing things way before even the PR folks do.

Towards the end of my time there, before I came over to The Autopian, I was told about a project so clandestine that I’d be murdered in my sleep if I even hinted about its existence. Few people even at Porsche knew that the company was building a 911 that could conquer a volcano somewhere in South America.

The more details I heard about the project, the more insane it sounded to me, and I was glad that I wasn’t going on this particular shoot. When I left, the project had been unsuccessful and that’s most of what I knew. Eventually, Porsche made it work, and Tangent produced a documentary about the climb. I saw it earlier this year at Pebble Beach in a theater and it made me feel viscerally uncomfortable. In a good way! This was scary.

You can now see the film on Amazon Prime and if you have Prime it’s worth watching. If you don’t have Prime, just get Prime to watch it.

What I’m Listening To While Writing TMD

My favorite political story this week was the one about the New Jersey congressman busted for making his Spotify wrapped playlist look like all his top songs were by Bruce Springsteen. That’s so New Jersey. I guess he’s on the “naughty” list this year, but perhaps he can get on the “good” list by listening to Bruce and the E Street Band performing “Santa Claus Is Comin’ To Town” in Houston.

The Big Question

What should the new Nissan-Honda and maybe Mitsubishi company be called? I’m enjoying Nissonda, a name suggested by Thomas. [Editor’s Note: What about more old-school, like Hondatsun? That has BOTH full names, thanks to the common letters! – JT]

Photo: Nissan/Honda/_____, This post contains an Amazon affiliate link and we could make a comission.