News analysis: For Honda, a Nissan rescue comes with only a thin silver lining

Concerns raised over why Honda would agree to risky tie-up with flailing carmaker

- Reuters

NEW YORK - Asked what makes Nissan Motor a strong business partner, Honda Motor chief executive Toshihiro Mibe struggled to find the right words. "That's a difficult one," Mr Mibe, having just announced plans to bring the two companies together under a single holding company, mused earlier this week before a packed room of journalists.

His remark raised a few chuckles, but on a serious note, it spoke to real and present qualms over why Honda would ever agree to such a risky deal with Nissan, and what it could gain by folding the flailing Japanese carmaker into its business.

The rapid rise of electric vehicles (EVs) in China and in parts of Europe, coupled with a resurgence in the popularity of hybrids, is pushing legacy brands to band together.

At the very least, by assuming Nissan's resources such as factories, manpower and intellectual property, Honda may gain access to the heft it needs to keep its own head above water.

"Scale definitely has advantages, and folks are going to have to take notice," said Mr Neal Ganguli, a partner and managing director at advisory firm AlixPartners' automotive and industrial practice.

"Both of these companies are behind on EVs, and they are very complementary with regard to the China threat," he added.

The consolidation of EV platforms, supply chains, and shared research and development expenses may also help improve both automakers' cost competitiveness, Bloomberg Intelligence said.

Nissan developed the world's first electric car, the Leaf, in 2010, and has sold more than half a million globally. While the company squandered that early lead and Leaf production has now largely wound down, CEO Makoto Uchida has laid out plans to expand Nissan's EV line-up, in part with the help of Honda.