Car giants' marriage ill-fated

Japan's ministry of economy, trade and industry has reportedly proposed a Nissan-Honda merger for some time.

Perhaps the ministry should send Terry Gou - the Taiwanese billionaire who owns Foxconn Technology Group - a Christmas card to thank him for showing an interest in acquiring Nissan, otherwise, Nissan and Honda may still be courting each other without getting married.

Nissan's disgraced former boss Carlos Ghosn told the media that he suspected Honda of being a reluctant partner in the deal that is yet to be formally announced.

However, according to Japanese media Nikkei, Honda was so unhappy with Gou's ambition over Nissan that it decided to push for the merger.

So, which report is closer to the truth?

If Nikkei is to be taken as more authoritative, the Japanese government should say thank you to Gou. That's because, first, its dream to see Japan's second and third largest automakers come together was about to become real and, second, Gou's takeover attempt unexpectedly provided a catalytic effect.

In the face of an imminent announcement of the deal, Gou was reported to have suspended acquisition talks.

It is apparent that Tokyo does not want to see another major Japanese brand fall into the tycoon's hand. Gou's takeover of major Japanese TV manufacturer Sharp has been less than successful, with the firm's share price currently standing at less than one tenth of its peak and the company ceasing to be a major TV-panel producer.

In the interview, Ghosn was extremely critical of Nissan and the reported deal, saying: "In my opinion, it's a desperate move.

"It's not a pragmatic deal because, frankly, the synergies between the two companies are difficult to find. There is practically [nothing] complementary between the two companies. They're in the same markets. They have the same products. The brands are very, very similar."

Ghosn may not be totally wrong as the two companies are undoubtedly very similar.

On one hand, Honda is proud of its engineering and, according to Ghosn, Nissan is also good at engineering. If they were to come together to become part of each other, which technology would be adopted?

Would this bring about a power struggle, given the nature of Japanese corporate culture?

Ghosn's criticism was full of cynicism at the same time, which should not be difficult to appreciate in view of the total breakdown in relationship between him and the company he led for many years.

Several years ago, Ghosn had to escape from Japan to avoid financial accusations that he strongly denied.

Nonetheless, it is believed that many analysts would agree with him that Chinese automakers have been rising quickly to become formidable competitors, especially in the area of electric vehicles that, according to the European Union, has been heavily subsidized by the Chinese government.

It is ironic because Nissan was the automaker to mass produce the world's first EVs.

Nissan and Honda are under pressure to team up to secure a larger size to generate the needed economic scale to face competition. The Nissan-Honda marriage would be followed by more similar exercises in the sector.