
Advertising Age spotlighted the planned merger starring
Honda and Nissan, with the former to lead on the road ahead.
For Adland, the
Japanese automakers’ union could create a horrendous car wreck.
The Honda US
advertising account is driven by RPA, a White advertising agency founded in
1986 during the creation of Omnicom. When Doyle Dane Bernbach (DDB) and Needham
Harper Worldwide became DDB Needham in that merger, a conflict arose because
the former serviced Volkswagen while the latter handled Honda. Leaders at
Needham Harper Worldwide’s Los Angeles office went rogue, quickly forming RPA
and taking the Honda business as its foundational account.
The Nissan
US advertising account is with Omnicom, which constructed a coalition of shops called
Nissan United in 2013.
So, the
Honda-Nissan merger could impact the Omnicom-IPG merger.
Will Omnicom
ultimately regain Honda, growing the revenue collected from Nissan? Or will RPA
pick up Nissan billings, adding to the Honda pot of gold? Which White enterprise
will lose a showcase client? And where does IPG—already affected by the General Motors and Stellantis maneuvers—fit in the impending collision?
One thing is
certain: Lots of adpeople will lose their livelihoods—with zero say in the
matter and/or no blame for the inevitable chaos.
Oh, and
non-White advertising agencies will be powerless pawns, pulverized patsies, and
pitiful peons in the political pileup.
Honda,
Nissan To Merge By Summer 2026
Japan’s second-
and third-largest auto players to join forces with Honda in the driver’s seat
By Hans Greimel
Honda and
Nissan plan to merge under a holding company with the top executives
chosen by Honda in a historic reshuffling of Japan’s auto industry meant to
keep the country’s second- and third-largest players competitive amid a global
onslaught of new competitors and technologies.
Mitsubishi
Motors, partly owned by Nissan, will decide by the end of January whether to
join the new partnership.
The CEOs of all
three companies announced the new framework at an afternoon news
conference on Dec. 23 in Tokyo, with Honda CEO Toshihiro Mibe in the
center, flanked by his counterparts. The companies said they will now negotiate
details.
“We have the
potential to be a world-class, leading company in new mobility,” Mibe said. “By
2030, we need the artillery to compete on the battlefield. So, we are starting
today.”
Honda, Japan’s
No. 2 automaker, and Nissan aim to finalize an agreement by next June
and establish the holding company by August 2026. They plan to take the new
entity public around that time, pending investor approval at extraordinary
shareholder meetings planned for around April 2026.
Both Honda
Motor Co. and Nissan Motor Co. will be delisted from the Tokyo Stock Exchange
and will become subsidiaries of the new holding company.
Honda is
expected to nominate the majority of directors and the president of the new
company. The final share transfer ratio will be decided later and be based upon
share prices, among other factors. Still undecided is the name and headquarters
of the new holding company.
In the U.S.,
Nissan has long used Omnicom for creative and media under a multi-agency set-up
called Nissan United. Nissan-owned Infiniti uses Publicis Groupe for
global creative. RPA handles Honda’s advertising in the U.S.
Nissan is the
world’s 60th-largest global ad spender, while Honda ranks 63rd, [according] to
the Ad Age Datacenter.
Nissan is
undergoing marketing leadership changes, with Allyson Witherspoon in
November taking on the U.S. chief marketing officer role. Witherspoon, who
held the position less than two years ago, retained her current role as
corporate VP of global marketing, brand and merchandising for Nissan Motor Co.
Mibe pitched
the agreement as a way to sharpen the companies’ competitive edge on everything
from production and vehicle R&D to sales financing, electrification and
software development.
The combined
operations won’t be a quick fix, Mibe cautioned. The first outcomes will start
to manifest only before the end of the decade, with the big payoffs coming
after 2030.
A combined
Honda and Nissan will be able to generate annual revenue exceeding ¥30 trillion
($181.84 billion) and operating profit exceeding ¥3 trillion ($19.18 billion),
the companies predicted.
Mibe said the
new combination was not a bailout of Nissan. Rather, he said, Nissan and Honda
will be expected to stabilize their own businesses before joining hands.
Embattled
Nissan, fighting long-term sales decline, massive debt and crumbling profits,
launched a revival plan in November that slashes global capacity and cuts 9,000
jobs worldwide.
Any finalized
deal will hinge on Nissan getting its house in order first, Mibe said.
In the
meantime, Honda is initiating large buybacks of its own stock to bolster its
share price, Mibe said. Honda wants to buy back up to 20% of its outstanding.
Honda is acting now before regulatory restrictions on buybacks take effect
during merger talks.
“It’s not going
to stay like [it] is today forever,” Mibe said.
The long-term
goal is not downsizing and rationalizing operations but rather growth and
bigger scale, he added. As an example of a potential impact on the U.S. market,
Mibe dangled the possibility of delivering a hybrid pickup truck, leveraging
Honda’s strength in gasoline-electric powertrains and Nissan’s experience in
body-on-frame trucks.
“We aren’t
thinking about just carving out, carving out, carving out and leaving only the
good parts,” Mibe said. “We want to think about options that lead us to bigger
scale.”
Mibe and his
Nissan counterpart Makoto Uchida said Honda will take the lead in
setting up the holding company because its market capital is bigger than
Nissan’s. Before news of the talks broke this month, Nissan’s share price had
tumbled 35% this year, as the company struggled with a litany of financial
problems including a net loss in the latest quarter.
“We will
definitely be able to address all the challenges ahead and deliver significant
new value that we have never seen in the past,” Uchida said. “We will be among
the top class.”
The Dec. 23
agreement builds upon a looser technology and purchasing partnership the companies
began exploring in March. At that time, Honda and Nissan said they would
explore teaming up on electric vehicles, automotive software, batteries,
procurement and more. Mitsubishi joined those talks in August.
“Without the
courage to transform, we will be unable to continue,” Uchida said. “If we can
enter discussions with speed, even against the many emerging players, we can
become a winner.”
Combining would
give the automakers bigger scale to drive down costs and share the R&D
burden for new technologies in an industry under siege by change.
But it also
would create a complicated overlap in Japanese production facilities, key
markets, management and product segments. Moreover, cross-holdings could
entangle the companies in a knotty shareholder web with existing Nissan
partners Renault and Mitsubishi.
Even after the
tie-up, Honda is expected to continue its project-based cooperation with General
Motors on the side, and Nissan will be able to continue its own with
Renault, Mibe said.
Last year,
Nissan emerged from two decades as the junior partner in its alliance with
Renault, after both companies agreed to rebalance their cross-holdings. Each
will have a 15% stake in the other after Renault sells down the balance of its
43% stake that is held in a trust.
As part of its
own restructuring and revival plans, Nissan is meanwhile selling down its
controlling 34% stake in Mitsubishi Motors Corp. that it acquired in 2016.
Mitsubishi CEO
Takao Kato said his company would examine the holding company and possibly
join. Mitsubishi brings strengths in Southeast Asia, plug-in hybrids and pickup
truck platforms.
“We see it as a
positive move,” Kato said. “It is extremely difficult to afford all the
investment and engineering resources alone.”
The biggest
potential positive of integrating Honda and Nissan would be huge scale. Though
both companies have dialed down forecasts, Nissan plans to sell 3.4 million
vehicles in the fiscal year ending March 31. Honda plans to sell 3.8 million
vehicles.
Synergies could
be spread across the companies’ combined sales of about 7.2 million vehicles.
Mitsubishi would chip in another 895,000 deliveries, bringing total sales to
more than 8 million.
Toyota Motor
Corp., by contrast, sold a record 11.09 million vehicles in the fiscal year
ended March 31, solidifying its place as the world’s No. 1. And that total
doesn’t count volume from its constellation of capital cross-holding partners,
including Subaru, Mazda, Suzuki and Isuzu.
While scale and
joint savings hold plenty of potential, execution will be the real test.
“On paper, many
proposed mergers look great,” S&P Global Associate Director Stephanie
Brinley wrote in an analysis. But there are many unanswered questions, she
added.
Among them is
how to support Nissan’s restructuring so it does not weigh down the team.
Another issue would be how to handle their overlapping premium brands—Acura and
Infiniti. How they jumpstart their imploding businesses in China will also be a
critical challenge.
Both companies
have already begun developing their next-generation EV platforms and
technologies for the latter 2020s. Integrating them could force more difficult
choices.
Then, there is
the thorny issue of meshing corporate cultures.
“Merging Nissan
and Honda creates scale, but accessing cost benefits from that scale is also a
long-range process which can be costly in the short term,” Brinley wrote. “Finding
meaningful and sustainable synergies in the product portfolio, in product
development and in manufacturing is where many mergers stumble and fail to live
up to the potential.”
Hans
Greimel is a reporter for Automotive News
Ad Age News
Editor E.J. Schultz contributed to this story