Nissan faces major cost cuts in potential Honda merger, says ex-CEO Ghosn

On Tuesday, Carlos Ghosn, the former CEO of Nissan (OTC:NSANY ), expressed concerns on CNBC about the potential negative impacts on Nissan should the company merge with Honda (NYSE:HMC ). Ghosn, who has a history of leading Nissan and forming the Nissan-Renault-Mitsubishi alliance, highlighted the risks of what he called a "carnage" due to significant overlaps between the two Japanese automakers.

During his appearance on CNBC's "Squawk Box Europe," Ghosn outlined that Honda would likely dominate in the partnership, which he finds regrettable given his role in bringing Nissan to prominence over his 19-year tenure. He pointed out that the two companies have a "total duplication" of operations, which could lead to severe cost-cutting measures.

Ghosn also mentioned that the potential merger lacks complementarity, suggesting that any synergies would come from cost reductions, including cutting duplicated plans and technologies. He warned that Nissan would bear the brunt of these cuts as the "minor partner" in the arrangement.

The former CEO compared the potential Nissan-Honda merger unfavorably to Nissan's previous alliance with Renault (EPA:RENA ). According to Ghosn, Nissan had greater complementarity with the French automaker, a partnership that has since been largely dissolved.

Carlos Ghosn has been residing in Lebanon after fleeing Japan in December 2019, where he was under arrest on charges of financial crimes, which he has consistently denied. His insights come from a position of experience but are also shaped by his controversial departure from the automotive world.

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Source: Investing.com