Nissan will become a victim of cost-cutting “slaughter” if it joins forces with its Japanese counterparts HondaFormer Nissan CEO Carlos Ghosn told CNBC on Tuesday.
“I think without a doubt Honda will be in the driver's seat, which is very sad after he ran Nissan for 19 years (and) brought Nissan to the forefront of the industry and saw that it would be slaughtered because Nissan and Honda were completely duplicating each other,” he told CNBC's “Squawk Box Europe.”
Ghosn, who once led three carmakers in the Nissan-Renault-Mitsubishi alliance, took up residence in Lebanon after being appointed arrested in Japan in November 2018 and fleeing trial on financial crime charges. He denies misconduct.
“There is virtually no complementarity here, which means that if they want to achieve synergy, it can be through cost reduction, plan duplication, technology duplication, and we know exactly who will pay the price for it. It will be a smaller partner and it will be Nissan,” Ghosn said.
Nissan had greater complementarity with French products Renaultestimated Ghosn, citing: a long-standing partnership that has largely been dissolved.
Speculation about a potential merger between Honda and Nissan began earlier this month and the two companies confirmed the official start of talks on business integration during Monday's press conference. Under the current proposals, a holding company would act as the parent of both companies and be listed on the Tokyo Stock Exchange, and Honda – whose market capitalization is about four times that of Nissan – would nominate a majority of the new entity's board members. Nissan's strategic partner Mitsubishi is also talking about joining the group.
The $54 billion Nissan-Honda group would overtake South Korea Hyundai to become the world's third-largest automaker in terms of vehicle sales, after Japan Toyotas and Germany Volkswagen. An integrated group would also represent a breakthrough in auto industry consolidation, which has long been expected both in Japan and around the world as companies struggle to afford the costs of developing electric vehicles and autonomous driving technology.
Honda and Nissan executives on Monday, stressed that the combined company will be able to share the knowledge and resources necessary to compete in the electric vehicle transformation and deliver economies of scale, increasing operating profit to a projected 3 trillion yen ($19.1 billion) in the long term.
Nissan launches ambitious merger while taking deep action restructure announced in November, which will reduce global production capacity by a fifth and cut 9,000 jobs.
Honda CEO Toshihiro Mibe acknowledged Monday that some shareholders may believe his company will support Fighting Nissan as part of the deal, but stressed that business integration talks “will not happen” unless the two carmakers operate independently.
Nevertheless, Ghosn told CNBC that the merger plan suggests that “Nissan is panicking and looking for someone to bail it out of this situation because it is unable to find a solution on its own.”
Without providing details, he expressed “great doubts” whether the recovery at Nissan would be successful.
Kei Okamura, senior vice president and portfolio manager at Neuberger Berman, reiterated the view that details of the merger plan still need to be worked out.
“If you're an investor, you're going to be thinking about three-to-five earnings forecasts. The short-term forecast, i.e. the schedule and long-term vision, was announced on Monday. The only question is how or how this combined entity will achieve its goal, and there is a lot of uncertainty there,” Okamura said Tuesday on CNBC's “Street Signs Asia.”
“Post-merger integration will be absolutely essential… if these companies cannot truly fully integrate with each other in terms of people, assets and, of course, culture, these transactions have the potential to end, and we must take into account that by that time the transaction may not take place if (Nissan) does not implement its recovery program,” Okamura added.
Nissan declined to comment for this story his statement leave on Monday. Honda did not immediately respond to CNBC's request for comment.
