Nissan could face cost-cutting 'carnage' in Honda merger, Carlos Ghosn says

Core Viewpoint - The potential merger between Nissan and Honda could lead to significant challenges for Nissan, as it may become the "victim of cost-cutting carnage" due to a lack of complementarity between the two companies [1][8]. Group 1: Merger Details - A proposed $54 billion merger between Nissan and Honda would position the combined entity as the world's third-largest automaker by vehicle sales, surpassing Hyundai [2]. - The merger is seen as a response to the high development costs associated with electric vehicles and autonomous driving technology, indicating a trend of consolidation in the automotive industry [2]. - The merger discussions began earlier this month, with both companies confirming the start of talks for business integration [11]. Group 2: Financial Implications - Executives from both companies believe that a merger would enable them to share resources and intelligence necessary for competing in the EV market, potentially boosting long-term operating profit to 3 trillion yen ($19.1 billion) [12]. - Honda's market capitalization is approximately four times that of Nissan, which raises concerns about the balance of power in the new entity, with Honda likely nominating most board members [11]. Group 3: Strategic Challenges - Former Nissan CEO Carlos Ghosn expressed skepticism about Nissan's ability to successfully turn around its operations, suggesting that the merger indicates Nissan is in "panic mode" [4][14]. - There are uncertainties regarding how the merged entity will achieve its long-term vision, with analysts highlighting the need for effective post-merger integration [5][16]. - The success of the merger is contingent upon Nissan's ability to execute its turnaround program, as failure to do so could jeopardize the merger [16].