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One of the biggest stories of the week comes from Japan. Honda and Nissan are in talks to form a merger to help withstand the challenges in the auto industry. The talks accelerated after fox Conn entered the fray, and we have breaking news this morning that they are putting their
interest on hold joining us now. Is the architect behind NISA's turnaround, the man known as lucost Killer, Carlosco and the former chairman CEO of Reno Nissan Mitsubishi, who has worked as the CEO from two thousand and one to twenty seventeen. Should just be said that mister Gon is currently suing Nissan for a billion dollars in defamation after his arrest in Japan in November twenty eighteen on charges of financial misconduct, which he denies. Mister go, good morning.
Great to have you with Monser, Great to have you. So Nissan, Honda, Nissan, Nissing going after Honda. Is this a pragmatic deal, carlos or a desperate roll of the dice?
Now, in my opinion, it's a desperate move. It's not a pragmatic deal because Frankly, the synergy between the two companies.
Are difficult to find.
There is practically no complementarity between the two companies that are on the same markets. They are the same products, the brands are very very similar. So in a certain way, from one side, Nissan, it's a desperate move to try to find the future, and from the other side Honda, which if I understand well that we're not very excited about this move, but you know, you have to count with METI in Japan that me and the METI had
the big had the big say into it. So at the end of the day, they're trying to figure out something that could marry the short term problems of Nissan and the long term vision of Honda.
Do you think Nissan is being put Do you think Honda is being pushed into this still by the economy industry? There's politics pushing the still colors rather than the value.
Of the deal. Without any doubt.
For me, that mean, having lived in Japan for so many years, I understand how influence can the mad TV and I can tell you that mean from all the data that they received about the performance of Nissan, which has been miserable for the last at least for the last two to three years. They have cash problem, they have investment problems. They're being really hammered in the United States. They got practically out of Europe, They're being challenged in China, and there is no plan in front of it.
So I can tell you that means there is panic mode inside.
Nissan, well very in panic mode. And then it then pushes the idea that there's the Economy Ministry as you say, are and do whatever it takes.
Moment for Nissan, yeah, well there is in my opinion, there is no industrial logic to it. But as you know, there is a moment where you have to choose between performance and control. Obviously you can have both, it's the better, but there are moments where you have to choose, and without any doubt, with the Meki and everything I know from it, they prefer control and performance. So they pushed Honda into the deal without any doubt.
With that in mind, Then Carlos, what kind of backstops? I mean, you've dealt with the Japanese, You've dealt with NIS, and you understand the the metrics to get these organizations together. Is the government going to have to deliver backstops? To Honda to make this deal work.
No, I think they got they in a certain way try to push Honda onto this deal. Obviously Honda must have some kind of benefit out of it, if not on the short term, at least on the mid and and the long term. But that will be closely monitored to make sure that the impact on the Japanese society is not going to be too big, because you know, when you have two companies of this size and practically in the same amount kid with practically the same strengths
and the same weaknesses. Uh, the they're gonna be a lot of costs to be taken out, and they're gonna be a lot of duplication to be taken out. So this is gonna be closely monitored by the by the means you dite.
The synergies are there, though.
Well, I can tell you that. I mean it's it's on the short term. I don't see too much synergy. Obviously you go to the classical one, which is purchasing together to try to leverage a better scale. But this is something that Nissan has done with real successfully into the in the past, except that at this moment it's really concentrated in Japan. It's it's three Japanese company which have very similar products. The image of the brand are not very different from one to the other. I'm including
Mitsubishi into into it. So it's gonna be very tough. But on the long term they can save on future investment by doing the investment one time in technology, doing it one time and sharing it with three companies.
Let's just press a little bit more on this. It's going to be tough, as you say, to get the synergies. Is it's driven by the Ministry of Economy. So there's a political dynamic to this. Is this japan creating putting two companies together to really try and stand up to the competition from China? Is that part of the narrative here?
Callus without any doubt that it makes a lot of logic. Today the Chinese auto maker are on the winning side. They are they became, as you know, the largest exporter of cars, they are the largest maker of ev they are being successful in a lot of new technology. They're doing fine cars. So in a certain way, yes, it's a defensive mode. It's a defensive mode that's going to be trying to shore up the Japanese industry and avoiding
a cataclysm. First it's social cataclysm in in Japan and particularly to try to reinforce these companies on the on the foreign markets.
Fox cornt have put on paused their interest in participating in the steel car lost. They had a million with Reno. It obviously didn't go according to what they wanted. Is there only a japan solution for this? Is there only a Japanese savior for Nissan in your view?
I don't see him for the moment, obviously, in the in the team existing today at Nissan, usually you can measure the team by the results they get. You know, that's the only way you know if somebody is capable of doing something. Frankly, when you look at the last five years, the results are not a good testimony of the strengths of the of the team.
Will there be a savior? I don't know.
I know how tough it's going to be, because you need to understand that Honda is.
An engineering organization.
It's it's very strong in engineering, and Nissa is very proud of its own engineering. So the battles here to try to decide what technology is going to be adopted by the new company or by if it's a merger or by the new alliance. I can tell you it's going to be very tough. I've been dealing with this for many years. I remember when we took control of Mitsubishi.
Mitsubishi was not afraid of the collaboration with Renal. They were afraid of the collaboration of Nissan because they know how tough it's going to be when engineers met together. And there is this pride of my solution is the best solution, which always is an obstacle to develop serious synergy for the future.
Well, of course you're going to have cultural issues when it comes even if there are two Japanese firms. I think the point I was trying to get to Carlos was, do you see the only solution being a Japanese to Japanese merger or joint venture. Do you see any possibility of an overseas company like Fox cont being allied into the allied into this house.
Well, the approach of Fox Con when I heard about it, was very interesting because it is something innovative. It is something that would have put Nissan in a completely different.
Path.
But the fact that you're telling me now that they are posing on it. They are very realistic people. They know they cannot do it against the will of the government of Japan and particularly of the METI. And now you need to know also that in Renau, the French state has a big say because they are a very influent shareholder in Renault. And I'm sure that the decision of pose is coming from the fact that they know the met is not very favorable and probably the French
government doesn't want to upset the Japanese. I've been a witness of how much the French government is pending backward to please the Japanese in the past.
Unfortunately.
Well, look, I know that there's on issues between yourself, the Japanese and the French, et cetera. But you have a ring sight see at many of those meetings. Is this, briefly before we talk about the global auto industry, Carlos, is this Renos moment exit? Do you think that that's what they hope for or do you think they really do want an equity participation?
Oh no, no, no, I think this alliance has been you know, since twenty twenty. It's some surprise. I told you that the alliance is a zombie. It's an appearance of an alliance. There is an appearance of a collaboration, but there was practically no collaboration at all. I think what Renald, after having the benediction of the blessing of the French government, is trying to maximize its asset inside Nissan. That're trying to get the most money out of their share.
But that will, in my opinion, that would sell. That would sell to Honda without any doubt.
Carlus, It's just broaden the conversation a little bit. You've lived to breathe this industry. You've seen the evolution of the Chinese electric vehicle market, the strength of the auto industry and China become. Are you surprised about how strong they become so quickly?
No, not at all.
You know, frankly, I've seen the signs of it when we entered China, when I was heading Nissan, and we entered China in two thousand and three, and we start building our plans and organizing the engineering. In a very short period of time, I would say seven or eight years after we built the plants in China, the Chinese plans were at the top of the ranking from all
our plans. I mean, we were comparing the productivity, the quality, the time to market of the Chinese plan compared to the Japanese plan, or to the US plans or European plans, and the Chinese came to number one. It's a very disciplined workforce. They are very, very eager to compete into this industry. So I think this industry in the next twenty years going to have to deal with the Chinese talent and the Chinese Noha.
Well, College, you were known as Davos Man. I think you were the voice of free trade. Every January. The world is bracing for our next round of trade disruption from Donald Trump. Every CEO of an other company out there probably has their own personal thoughts, but they probably can't really express them. You can. You're free Now as the auto CEOs lineup, what can they not say? What do you think they're thinking? But they can't say?
Look if you I mean, this is an industry which is by the definition and global industry. You can survive as an automaker if you are restricted from accessing any market in the world. Size matters, Investments are huge, economy of scale are extremely important. So this industry is living on globalism and globalization so I think it's very bad news for all the automakers to know that they're going to tariffs and they're going to be obstacles for them
to be present in all the market. This will translate into a lot of them having problems and certainly a higher price for car in all the markets.
Do you think you'll see a major auto failure in twenty twenty five carors.
Well, you know there is no auto failure.
There are, in a certain way, companies that are so weak that somebody else comes and buy them. When you look at the market capitalization of Nissan today, it's really very small, and I can understand that the company like foxcon headed by very serious and realistic management, is going to say, you know what, instead of us investing to do our own electric car, let's buy a car company. They're not going to be the only one to try
to do that. Instead of building something from scratch, you can take control at the relatively cheap price of an existing car manufacturer, get rid of everything you don't need, and really concentrate on what's important for you for the future. I'm expecting a lot of moves like this in the future, particularly for the weaklings of the crimes
Carlus Cone, thank you for joining me this morning candid conversation Carlos Kone, the former chairman and CEO of Reno Nissan Mitsubishi Alliance, who served as the Nissan CEO from two thousand and one to twenty seventeen