What a Honda-Nissan merger could mean for the auto industry and consumers
Auto expert Mike Caudill joins “The Big Money Show” to share his thoughts on why automakers are slowing down production of electric vehicles.
Honda and Nissan are reportedly looking possibility of mergersparking speculation about what the potential move could mean, but experts say the news of the partnership is no surprise.
News of the merger talks, first reported by the Nikkei newspaper on Tuesday, comes as Japanese auto giants also struggle to compete with global electric vehicle (EV) makers. including Tesla and Chinese automaker BYD.
Nissan and Honda are reportedly in discussions over a potential merger. (Getty Images/Getty Images)
While neither Honda nor Nissan have confirmed merger discussions, Brian Moody, executive editor of Autotrader and Kelley Blue Book, predicted about a year ago that there would be more of these types of collaborations as the companies could combine resources and pay costs.
Moody said FOX Business: In an interview, if a small brand says they’re going to go all-electric, that’s one thing, but for a big company to do that is a huge undertaking that requires a huge amount of research and development.
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Honda and Nissan are the second and third largest automakers in Japan, respectively, with Toyota leading both.
News of a possible Honda-Nissan merger is no surprise (YOSHIKAZU TSUNO/AFP via Getty Images/Getty Images)
The respective market capitalizations of Honda and Nissan are approximately 5.95 trillion yen ($38.8 billion) and 1.17 trillion yen ($7.6 billion).
“Company like Honda may not be able to do it on their own, but at the same time, Honda has a pretty compelling product, so I feel like they both bring something important to the table,” Moody said.
“But the important thing is to pool the resources to make it happen [they] Don’t make a bad business decision for a technology, electric cars, which is growing, but not growing as fast as people thought or expected,” he added.
According to Brian Moody, a possible outcome of a potential Honda-Nissan merger could be a low-cost EV version. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
So what could the merger mean for the consumer?Moody says he can see the value of smaller, cheaper electric cars coming from such a deal.
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“I could even see a merger or partnership like this that would result in a low-cost sub-brand,” he said. “You know, new cars are just too expensive. I can’t afford a new car.”
FOX Business’ Andrea Margolis and Reuters contributed to this report.
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