Nissan will be the victim of a cost-cutting “slaughter” if it joins forces with its Japanese counterparts Hondaformer Nissan CEO Carlos Ghosn told CNBC on Tuesday.
“I think, without any doubt, Honda will be in the driver’s seat, which is very sad to see after running Nissan for 19 years [and] they put Nissan at the head of the industry, only to see that they will be the victim of carnage, because there is complete duplication between Nissan and Honda,” he told CNBC “Squawk Box Europe.”
Ghosn, who once ran three automakers in the Nissan-Renault-Mitsubishi alliance, lives in Lebanon after arrested in Japan in November 2018 and flees from trial on charges of financial crime. Denies bad behavior.
“There is practically no complementarity here, which means, if they want to create synergy, it will be through perhaps reducing costs, duplicating the plan, duplicating technology, and we know exactly who will pay the price for that. It is going to be a smaller partner, and it will be Nissan.” Ghosn said.
Nissan had a greater complementarity with France Renaultestimated Ghosn, referring to a a long-standing partnership that has largely broken down.
Speculation about a potential merger between Honda and Nissan began earlier this month, and the two companies confirmed the official start of negotiations on business integration during a news conference on Monday. Under current proposals, the holding company would act as the parent of both companies and be listed on the Tokyo Stock Exchange, and Honda — which has a market capitalization about four times that of Nissan — would nominate most of the new entity’s board members. Nissan’s strategic partner Mitsubishi he is also involved in negotiations to join the group.
The $54 billion Nissan-Honda group would leapfrog the South Korean one Hyundai to become the world’s third largest car manufacturer by vehicle sales, behind Japan Toyota and German Volkswagen. The integrated group would also represent a milestone in the consolidation of the auto industry, which has long been expected in Japan and around the world as companies struggle to meet the costs of developing electric vehicles and autonomous driving technology.
Executives of both Honda and Nissan on Monday he emphasized that the combined company will be able to share the intelligence and resources needed to compete in the EV transition and achieve economies of scale, increasing operating profits to a projected 3 trillion yen ($19.1 billion) over the long term.
Nissan is embarking on an ambitious merger while simultaneously undertaking a deep dive to restructure announced in November, which will cut global production capacity by a fifth and cut 9,000 jobs.
Honda CEO Toshihiro Mibe acknowledged on Monday that some shareholders may feel his company will support struggling Nissan as part of the deal, but stressed that business integration talks “will not bear fruit” if the two automakers fail to stand alone.
Ghosn, however, told CNBC that the merger plan suggests that “Nissan is in a panic, looking for someone to bail them out, because they are unable to find a solution on their own.”
He expressed “great doubt” that the turnaround at Nissan will be successful, without giving details.
Kei Okamura, senior vice president and portfolio manager at Neuberger Berman, echoed the sentiment that the details of the merger plan still need to be ironed out.
“If you’re an investor, you’re going to think about three to five earnings prospects. What’s announced [Monday] it was a short-term, therefore timeline, and a long-term vision. The only question is how this merged entity will get there, and there’s still a lot of uncertainty,” Okamura told CNBC “Street signs of Asia“on Tuesday.
“Post-merger integration will be absolutely necessary … unless these companies are able to really fully integrate together in terms of people, assets and, of course, culture, these deals have the potential to be considered, and we have to consider that this deal may not happen if [Nissan] it’s not going through its turnaround program,” Okamura added.
Nissan declined to comment further for this story your statement out on monday. Honda did not immediately respond to CNBC’s request for comment.
