Honda and Nissan announced Dec. 23, 2024, their intention to merge and signed a memorandum of understanding. The unification will unfold over the next two years, and will eventually include Mitsubishi.

One glaring omission from the discussions is Renault. It holds a controlling 43.4 percent of Nissan as part of the Renault-Nissan-Mitsubishi alliance. Renault’s absence suggests a significant shift is underway. It raises more questions than answers about the companies’ merger motives.

Nissan’s troubles are not new. The company has faced mounting financial struggles for years, culminating in its 2024 Q3 earnings report. It revealed the carmaker was on the brink of bankruptcy. Poor sales have plagued the brand. Nissan was forced to consolidate Infiniti and Nissan dealerships.

Mitsubishi enjoyed a 25 percent sales increase in 2024, but that represents an insignificant 0.6 percent market share in the United States, its largest market. Mitsubishi has never recovered from a sales collapse in 2008 and 2009.

Known for building quality products, Honda is stepping into a partnership that seems more like a rescue mission.

A Merger of Unequals

Honda and Nissan are not equals. In the U.S., its largest market, Honda commands an 8.65 percent market share; Nissan’s market share is 4.76 percent. More importantly, Honda is a long-time reliability leader, second to Toyota among Japanese automakers.

Nissan has a history of compromising quality during financial struggles. It’s cut costs by using cheaper materials and components. The result is an inferior, non-competitive carmaker.

Mitsubishi’s inclusion adds little. The brand has struggled for nearly two decades, with dismal sales and a nearly nonexistent presence in North America.

If it made sense for General Motors to shed underperforming brands like Oldsmobile, Pontiac and Saturn, perhaps Nissan should consider jettisoning Mitsubishi. Dragging Honda into the merger dilutes its brand equity.

The Renault Question

The conspicuous omission of Renault from Honda-Nissan-Mitsubishi merger announcements could signal a deliberate effort by Nissan and Mitsubishi to break free from the carmakers’ French partner.

A tumultuous relationship between partners has arguably contributed to Nissan’s current financial woes.

Renault saved Nissan from bankruptcy in 1999, assuming $5.4 billion of Nissan’s debt and forming the Renault-Nissan alliance. Mitsubishi later joined the alliance. Renault’s CEO, Carlos Ghosn, assumed Nissan’s chief executive role.

Corporate Intrigue

Ghosn orchestrated Nissan’s dramatic return to profitability, but his leadership style caused friction. Revered for his financial acumen, Ghosn was loathed for slashing executive perks and he clashed with Nissan’s corporate culture.

Resentment among Nissan executives simmered, culminating in Ghosn’s dramatic downfall. He was accused by Nissan of financial misconduct in 2018. He was charged and placed on house arrest. But in a sensational, Hollywood-style escape, Ghosn fled to Lebanon.

While maintaining his innocence, Ghosn’s arrest and escape have only deepened the perception of dysfunction within Nissan.

Culture Clash

If there’s a lesson learned from corporate history, it’s that merging companies with different cultures often spells trouble. Honda’s culture of continuous improvement, rooted in quality and reliability, stands in stark contrast to Nissan’s reputation for cost-cutting and internal drama.

This merger bears unsettling similarities to Boeing’s merger with McDonnell Douglas in the 1990s. That deal appeared promising but resulted in the dilution of Boeing’s once stellar reputation for quality and safety. Boeing shifted from being a product-driven company to profit-driven, leading to devastating consequences, including fatal accidents and a shattered public image.

Tarnished Legacy

There’s also an uncomfortable historical undercurrent to the merger. Nissan’s and Mitsubishi’s role in World War II. Both companies were instrumental in the war in the Pacific.

While many consumers today may not associate these brands with their wartime activities, the legacy lingers. My family experienced the war firsthand.

Mitsubishi manufactured Japanese Zero fighter planes that bombed Pearl Harbor. My family lived in a nearby community along the flight path Japan used to launch its attack on the American Pacific Fleet.

My dad and grandparents were repeatedly strafed by Japanese machine gun fire from Mitsubishi Zeros on the morning of Dec. 7, 1941. Decades later, I mowed the lawn at my grandparents’ property in Hawaii, the mower blades frequently striking Japanese bullets—tangible reminders of the attack. Such memories are not easily forgotten. Honda should consider the potential reputation risks of aligning itself with brands carrying historical baggage.

A Risk Not Worth Taking

The risks of absorbing Nissan’s dysfunction and Mitsubishi’s irrelevance far outweigh the potential benefits. Honda’s focus should remain on developing its technologies, particularly in electrification, rather than entangling itself with struggling rivals.

Hidden Agenda

As Honda CEO Toshihiro Mibe struggles to articulate the merger’s benefits, it raises questions about its true motivation. Is this about manufacturing synergy, or is it an effort to reclaim Japanese autonomy in the auto industry? Ghosn’s ouster from Nissan, widely seen as political, may have paved the way for this nationalist agenda.

If the merger is driven by geopolitical considerations rather than sound business strategy, it risks undermining Honda’s reputation and financial stability.