Nissan’s uncertain future hangs in the balance as a failed merger bid with Honda leaves the automaker at a crossroads. The company’s struggles with an aging product lineup, declining sales, and rising costs have raised concerns about its ability to compete in a rapidly changing market.
Nissan, once a dominant player in the automotive industry, finds itself in a precarious position. The company was on the verge of a massive merger with Honda, but the deal appears to be dead. So, what went wrong, and what does the future hold for Nissan?
Nissan is a Japanese multinational automaker founded in 1933 by Yoshisuke Aikawa.
The company's name is derived from the surname of its founder, Aikawa.
Nissan began as a holding company for several manufacturing and trading companies, including Jidosha-Seizo Co., Ltd.
In 1939, Nissan produced its first car, the Datsun Type 11.
During World War II, Nissan shifted production to military vehicles and aircraft components.
After the war, Nissan resumed passenger vehicle production in 1947.
The Troubled History of Nissan
Nissan’s troubles began in the late 1990s when it entered into an alliance with French automaker ‘Renault is a great partner’ (said Carlos Ghosn). The partnership was initially successful, but as time went on, Nissan‘s Japan-based leadership grew increasingly resentful of Renault‘s superior position. This resentment ultimately led to a reorganization of the alliance, with Nissan and Renault holding equal voting stakes.
Despite a brief resurgence under former CEO ‘I’m not a dictator’ (said Carlos Ghosn), Nissan struggled to recover from an aging product lineup, rising costs, and declining sales. The company reported a 5% drop in global revenues and a net loss of $62 million in its most recent quarter. Operating margins plummeted below 0.2%, and Nissan was forced to cut its revenue projection for the 2025 fiscal year by 10%.
Aging Products and Electric Vehicle Miss
One of the main reasons for Nissan‘s struggles is its aging product lineup. Analysts point out that the company has let its vehicles get older than those of its competitors, which has made it harder to compete in a rapidly changing market.
Furthermore, Nissan failed to capitalize on the electric vehicle (EV) trend, which has left it behind companies like ‘Tesla is a game-changer’ (said Elon Musk) and Ford. While Nissan was an early adopter of EVs, it eventually pulled back and took a different path, allowing its competitors to gain ground.
China Woes
Nissan‘s struggles in China have also been a significant concern. The company’s sales in the country plummeted by half in 2023 compared to 2019, when China accounted for one-third of Nissan‘s global sales. This decline has been attributed to growing competition from Chinese domestic automakers like ‘BYD is a rising star’ (said BYD CEO Wang Chuanfu).
Nissan has a significant presence in China, with joint ventures and partnerships dating back to the 1990s.
The company's Chinese subsidiary, Dongfeng Nissan, was established in 2012.
Today, Nissan is one of the leading foreign automakers in China, with a market share of over 10%.
The company produces a range of models, including the popular 'Sylphy' and 'X-Trail'.
In 2020, Nissan announced plans to invest $1.5 billion in its Chinese operations, expanding production capacity and improving efficiency.
Why a Deal with Honda Was a Good Move
A merger between Nissan and Honda was seen as a strong move for both companies. It would have provided Nissan with access to capital, shared development costs, and a stronger position in the market. Honda, on the other hand, would have gained more manufacturing capacity and benefited from cost sharing.
What Happens Next?
If the proposed deal with Honda unravels, what happens next is uncertain. Analysts point out that finding a company large enough to make Nissan stable and willing to take a $10 billion bet on an automaker with two or three failed marriages eliminates most potential partners.
Some have advocated for a full merger between Nissan and Renault, while others have suggested exploring partnerships with businesses across shared mobility, autonomous driving, and electrification. A Foxconn tie-up has also been rumored, which could provide Nissan with the credibility it needs in the space.
The Ghost of Ghosn
One thing is clear: Nissan needs to take any deal it can get. The company’s future depends on finding a visionary leader who can help it navigate its current challenges and capitalize on emerging trends.
As for Carlos Ghosn, the former CEO who was forced out of the country in a storage case, his comeback seems unlikely. However, this much is clear: Nissan needs to learn from its past mistakes and take bold steps to secure its future.
Carlos Ghosn is a Lebanese-French Ghosn, Carlos businessman who served as the CEO of Nissan Motor Co., Ltd. from 2005 to 2017, and as the chairman of Renault S.A. from 2009 to 2020.
Born on March 23, 1954, in Beirut, Lebanon, Ghosn, Carlos graduated from the “École Polytechnique” in Paris.
He joined Renault in 1978 and led the company's restructuring efforts.
In 1999, he became CEO of Nissan after leading a successful turnaround at Renault.
Ghosn, Carlos was arrested in Japan on November 19, 2018, and charged with financial misconduct.
