History Lesson: Mergers of big carmakers not a smooth ride always

Japanese automakers Honda and Nissan are discussing a possible merger, in a bid to share costs and help themselves compete in a fast-changing and increasingly competitive industry. But a merger, even of two companies from the same country, is no guarantee of success, and the history of automotive deals is littered with failures and disappointments.

Combining two large, global manufacturing operations is an incredibly difficult feat that involves reconciling different technologies, models and approaches to doing business. A merger's success rests on getting ambitious managers and engineers who have spent decades competing with each other to cooperate. Teams and projects have to be scrapped or changed, and executives must cede power to others. In some cases, the merging firms are hamstrung by elected leaders who force them to keep operating money-losing plants.


Thomas Stallkamp, an automotive consultant based in Michigan, was involved in the struggles of one of the biggest auto mergers: the 1998 merger of Chrysler and German company Daimler. Stallkamp spent years in senior roles at Chrysler and DaimlerChrysler.

"Car companies are big, complicated organisations, with large engineering staffs, manufacturing plants all over the world, hundreds of thousands of employees, in a capital-intensive business," Stallkamp said. "You try to put two of them together and you run into a lot of egos and infighting, so it's very, very difficult to make it work."

Honda and Nissan announced plans this year to work together on electric vehicles, and on Monday, they formally began talks about extending that cooperation to a merger that could also include Mitsubishi Motors, a smaller manufacturer that works closely with Nissan. A pairing would unite Japan's second- and third-biggest automakers, after Toyota, and create a company that would be the third largest in the world by number of cars produced, after Toyota and Volkswagen.

The merger discussions were prompted by difficulties the companies are facing around the world.

Chief among those problems is that sales have plummeted in China, the world's largest auto market. Chinese car buyers are moving much more quickly to electric and plug-in hybrid cars and trucks than most industry experts had expected. Honda and Nissan offer few such models, which now account for more than half of all cars sold in China. Companies that are doing the best in the shift away from gasoline cars are domestic manufacturers such as BYD and SAIC, as well as Tesla.

A merger could help Honda and Nissan develop electric cars faster and at lower cost - in theory. But other companies have struggled to achieve such gains in practice, often because the priorities of companies working together often shift and diverge. Ford Motor and Volkswagen teamed up a few years ago to work on EVs and autonomous driving technology. But the companies shut down their self-driving car business and reaped few benefits from collaborating on EVs.

Honda had a partnership with General Motors, and currently sells two electric SUVs - the Honda Prologue and Acura ZDX - that are manufactured by GM. But the companies have decided not to extend the partnership beyond those models, and GM is now exploring ways to work with Hyundai.

Still, analysts said a merger of Honda and Nissan had the potential to help both companies. In the United States, the two companies have similar product lines focused on small- and medium-size cars and SUVs such as Nissan's Sentra, Altima and Rogue and Honda's Civic, Accord and CRV.