Nissan-Honda merger faces delays, limited gains, S&P says

A potential merger between Honda and Nissan would not offer quick gains, as the automakers would need to first align their strategies and face overlapping regional markets that would limit sales benefits, S&P analysts noted on Wednesday.

While the proposed deal would create a $54 billion automotive giant, the world’s third largest, any improvements to its credit outlook would be gradual, according to their research note.

“We … believe it will be difficult for them to produce significant effects quickly through expanding the scope of their collaboration to include batteries, software, and autonomous driving,” S&P analysts stated, adding that the ultimate impact on their creditworthiness would be significant.

A merger is expected to have a negative impact on Honda’s standalone credit outlook, while benefiting Nissan’s, the analysts noted. They also highlighted that despite both companies having different development strategies, they operate in similar regional markets, particularly in North America, China, and Japan.

“They therefore don’t complement each other much in terms of regional sales,” the analysts noted.

Attribution: Reuters