Nissan and Honda May Face Significant Cost Cuts in Merger, Says Former CEO Ghosn

On Tuesday, former Nissan CEO Carlos Ghosn expressed his concerns about the potential negative effects on Nissan in the event of a merger with Honda during an appearance on CNBC. With a background in managing Nissan and establishing the Nissan-Renault-Mitsubishi alliance, Ghosn highlighted the risks he described as "catastrophic," due to significant overlaps between the two Japanese car manufacturers.

During his speech on CNBC's "Squawk Box Europe," Ghosn stated that Honda would likely be the dominant partner in the alliance, which he found disappointing given his role in elevating Nissan during his 19-year tenure. He pointed out that there is "complete overlap" in the operations of the two companies, which could lead to severe cost-cutting measures.

Ghosn also noted that the potential merger lacks complementarity, suggesting that any synergies would largely come from cost reductions, particularly through the elimination of overlapping plans and technologies. He warned that Nissan would bear most of these cuts as a "minor partner" in the arrangement.

The former CEO compared the potential Nissan-Honda merger unfavorably to Nissan's previous alliance with Renault, arguing that there was greater complementarity with the French automaker, a partnership that has since largely ended.

Carlos Ghosn has been residing in Lebanon since escaping from Japan in December 2019. While detained in Japan, he faced financial crime charges, which he consistently denied. Ghosn's views stem from his experience but are also influenced by his controversial departure from the automotive world.