Why Hyundai, Not Honda, Should Acquire Nissan

The automotive trade press is a buzz with news that Honda and Nissan are potentially looking to merge. Also, there are credible rumors that Foxconn, famed iPhone manufacturer, also wants a piece of the Nissan pie but for obvious reasons, that is unlikely to happen.

Nissan is no newbie when it comes to financial difficulties. It first hit the skids in the late 90s, when it partnered with France’s Renault. While the alliance with Renault gave Nissan a new life, it once again found itself in a lurch when the architect of its incredible revival, Carlos Ghosn, was accused of financial crimes and mismanagement of Nissan’s corporate funds by the Japanese government. He later fled Japan under the cover of darkness, a tale that is entirely too epic for a CEO of a car company.

While the stated reason for the merger talks between Honda and Nissan are entirely aimed at surviving the tsunami of Chinese EVs, it’s obvious that the Japanese government would prefer that two companies work together to avoid a foreign company taking them over Nissan. After all, Honda already has a partnership with Sony to develop EVs with the brand Afeela. While Honda and Nissan are both Japanese car companies, they have taken very different paths to developing cars. Honda makes great cars, and in its past has made amazing sports compacts. However, the two styles would clash very much, and would make Nissan far less interesting. As an outside observer, it seems like the two have nothing compelling to offer as a single enterprise.

A merger between Hyundai and Nissan, however, presents far more synergy. Hyundai gets access to a brand has incredible motorsports heritage, as well as off road credentials. All things Hyundai can nurture to their former glory. While I am sure there are some cultural picadillos between a Korean and Japanese automakers, the threat that the Chinese competition presents should be enough motivation to get along.

Hyundai could focus on making Nissan an enthusiast focused brand, something it lacks in its current offering and has been largely unsuccessful at achieving on its own. Also, Hyundai could benefit from Nissan’s engineering prowess. Their current offerings have a reputation of being less than reliable, and Nissan is could shore up those issues easily.

Nissan has a large catalog of IP, much of which is somewhat behind the current market. It also owns a significant stake in Mitsubishi, a brand also lacking in many areas. Hyundai could package Nissan’s overlapping IP with Mitsubishi, and sell it off as a package.

From Genesis to Infiniti

Hyundai’s most recent brand is Genesis. The aim is clear, an Asian car manufacturer wanted to beat the Germans at their own game. If that sounds familiar, it is because that is exactly what Nissan and the other Japanese brands did in the late 80s.

If Hyundai was to acquire Nissan, Infiniti would surely come along with it. This overlap would be difficult to sort out. But that is why I am here for them.

Infiniti has a great brand, with aging models that are uncompetitive in the market. Genesis has great models, that need a little assistance to be deserving of their incredibly high sticker prices. But the brand is one of the major hurdles in getting there. I am not speaking about the brand’s reputation, but its name and winged logo. Pairing the existing Genesis models, including the Magma performance trim, with Infiniti’s brand, would create a vortex of profitable synergy.

But what then becomes of the Genesis brand that Hyundai invested a fortune to create?

Keep it. Ditch Hyundai as a brand. Shift the existing models into Genesis, of course. As of late, Hyundai has really been firing off some great models. By elevating the Hyundai products to the Genesis brand, they can create some distance from Kia, which it owns a roughly 34% stake in, and the Nissan brand which it just acquired. On some of their top trims and EVs, the flying H logo is replaced with four dots, the Morse code of H. Hyundai is bringing a much higher level of vehicle to the market than when the flying H first hit the market outside of South Korea.

A recent survey suggested that Hyundai is a favorite brand of quiet millionaires. This means that the models Hyundai is producing already has the attention of a higher end market, and this is a far better use for the name than its current form. The Hyundai Motor Company will become the parent company to the brands, and the brand shuffle creates slots Nissan in the mainstream and enthusiast market, Genesis in the mainstream premium market, and Infiniti in the luxury market.

What About Mitsubishi?

Nissan currently owns roughly 24% of Mitsubishi, after divesting about 10% earlier this year. As mention earlier, Hyundai would package it up with Nissan IP and sell it off to Mahindra. India is about to have the world’s largest middle class, many of whom want cars. Mahindra wants to be a global player. A few years ago, it tried to expand globally with the acquisition of SsangYong. It did not go as planned.

Mahindra can buy its way into a global audience with Mitsubishi. It immediately gets a venue to sell it’s EVs, and the engineering prowess of a company well versed in selling in a diverse global marketplace, along with some Nissan IP that it can slice and dice into a full-fledged line-up.

Like Mitsubishi, Mahindra is a conglomerate with fingers in many pies. The two brands have already worked together when Mahindra acquired a large stake in Mitsubishi’s agricultural equipment division.

A New Alliance

Currently, Renault, Nissan and Mitsubishi are in an Alliance. I suspect that Mahindra and Renault would benefit from on-going tie-up, but Hyundai would not need any part of it. And if Hyundai did want to continue, it would obviously become the leader of said alliance.