Nissan will fall victim to a cost-cutting “carnage” as it joins forces with Japanese rivals Hondaformer Nissan CEO Carlos Ghosn told CNBC on Tuesday.
“I think without a doubt that Honda will be in charge, which is very sad considering he ran Nissan for 19 years (and) brought Nissan to the top of the industry to see them fall victim to carnage because there is a complete duplication between Nissan and Honda,” he told CNBC’s “Squawk Box Europe.”
Ghosn, who once led three car manufacturers as part of the Nissan-Renault-Mitsubishi alliance, has lived in Lebanon ever since arrested in Japan in November 2018 and fleeing trial for financial crimes. He denies wrongdoing.
“There is practically no complementarity here, which means that if they want to achieve synergies, then perhaps by cutting costs, duplicating plans, duplicating technology, and we know exactly who will pay the price for this. It’s running.” “The smaller partner will be Nissan,” said Ghosn.
Nissan had greater complementarity with France RenaultGhosn estimated, citing a long-term partnership that has largely been wound up.
Speculation about a possible merger between Honda and Nissan and the two companies began earlier this month confirmed the official start of discussions about corporate integration during a press conference on Monday. Under current proposals, a holding company would act as the parent of both companies and be listed on the Tokyo Stock Exchange, with Honda – whose market capitalization is about four times that of Nissan – nominating most of the new company’s board members. Nissan’s strategic partner Mitsubishi is also in talks to join the group.
A Nissan-Honda group with sales of $54 billion would overtake South Korea Hyundai to become the third largest automobile manufacturer in the world after Japan Toyota and Germany Volkswagen. The integrated group would also represent a milestone in the consolidation of the auto industry that has long been anticipated both in Japan and globally as companies struggle to meet the costs of developing electric vehicles and autonomous driving technology.
Executives at Honda and Nissan stressed on Monday that a combined company would be able to share the information and resources needed to be competitive and achieve economies of scale in the transition to electric vehicles, increasing operating profits in the long term to an expected 3 trillion yen (US$19.1 billion ) could be increased.
Nissan launches the ambitious merger and at the same time takes a profound step restructure It announced in November that it would cut global production capacity by a fifth and cut 9,000 jobs.
Honda CEO Toshihiro Mibe acknowledged Monday that some shareholders may think his company would support them struggling Nissan as part of the deal, but stressed that business integration talks “would not lead to success” if the two automakers could not stand alone.
Still, Ghosn told CNBC that the merger plan suggests that “Nissan is panicking and looking for someone to bail them out of the situation because they are unable to find the solution themselves.”
He expressed “big doubts” that Nissan’s turnaround will be successful, without giving details.
Kei Okamura, SVP and portfolio manager of Neuberger Berman, shared the view that details of the merger plan still need to be clarified.
“If you’re an investor, think about the three to five earnings prospects. What was announced (Monday) was the short-term perspective, that is, the schedule and the long-term vision. The only question is how. “Will this combined company get there, and there’s still a lot of uncertainty ahead,” Okamura told CNBC’s “Street Signs Asia” on Tuesday.
“Post-merger integration will be absolutely essential…if these companies are unable to truly fully integrate in terms of the people, the assets and of course the culture, these deals have the potential to unravel , and we.” “I have to keep in mind that if (Nissan) doesn’t implement its turnaround program, this deal may not happen,” Okamura added.
Additionally, Nissan declined to comment for this story his statement out on Monday. Honda did not immediately respond to a CNBC request for comment.
