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  • 🌏 Honda and Nissan Announce Merger Plans, VW and the Union Make Peace, and California Is Still Talking about 2035.

🌏 Honda and Nissan Announce Merger Plans, VW and the Union Make Peace, and California Is Still Talking about 2035.

Author

Chris Reeves
December 23, 2024

The Gist

Honda and Nissan finally stopped playing coy and announced their 2026 merger, aiming to create the world’s third-largest auto group. Meanwhile, Toyota isn’t joining the group hug—it's building a solo EV factory in Shanghai to keep up with China’s BYD. Over in California, lawmakers are dreaming of a zero-emission utopia by 2035, but let’s not forget most cars on the road today still run on gas.

Canoo, the EV startup everyone loves to doubt, furloughed employees and locked them out of the office. Turns out, running a business on fumes and government contracts isn’t sustainable. Meanwhile, tariffs loom large, threatening to spike car prices, and the used-car market is tighter than your dealership’s holiday budget. Sales are strong, inventory is scarce, and loan rates are finally dipping.

Fuel for Thought

🤝 Honda and Nissan Put the Rumors to Rest—By Confirming Them

After speculation, Honda and Nissan have officially announced their plans to merge by 2026. This game-changing partnership aims to create the world's third-largest auto group, tackling challenges from EV rivals like Tesla and BYD. Here’s how the historic deal shakes out.

  • The Deal in Numbers: With combined sales of over 8 million vehicles annually, the Honda-Nissan alliance will join the ranks of Toyota and Volkswagen. The partnership targets ÂĽ30 trillion ($191 billion) in sales and a ÂĽ3 trillion operating profit.

  • Mitsubishi on the Fence: While Nissan’s smaller partner, Mitsubishi Motors, is considering joining the alliance, a final decision is expected by January 2025. Including Mitsubishi would further solidify the group’s global reach.

  • Why Now? Facing increased pressure from Tesla and Chinese competitors like BYD, Honda CEO Toshihiro Mibe explained, "If we don’t build up capabilities to compete by 2030, we’ll be beaten.” The merger focuses on electrification, software, and scaling operations to stay ahead in the EV race.

  • Structure and Leadership: The merged entity will be run under a holding company, with Honda appointing the majority of the board. Shares will be delisted in August 2026, signaling a unified corporate strategy.

  • Turning the Tide: Both companies have struggled in key markets like China, where EV innovators have dominated. The merger isn’t a "rescue mission," as Honda’s CEO clarified, but a strategic pivot to reclaim their competitive edge.

  • Next Steps: Talks will wrap up by mid-2025, with operational plans beginning shortly thereafter. For now, the auto world is watching closely as Japan’s second and third-largest automakers join forces to rewrite the industry playbook.

More On The Automotive Troublemaker Podcast

🏭 But Not Everybody in Japan Is Buddying Up

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Solo Play for Toyota in China

While Honda and Nissan are teaming up, Toyota is taking a different route—literally. The automaker plans to build a new factory in Shanghai to produce its luxury Lexus EVs, bypassing its usual joint ventures.

Independent Ambition

Set to open in 2027, this factory marks Toyota’s move to establish a firmer foothold in the Chinese EV market, countering BYD and other local giants. By going it alone, Toyota aims to control its destiny—and its production lines.

Why It Matters

As rivals consolidate to face global competition, Toyota’s bet on independence could either solidify its reputation as an industry leader or leave it playing catch-up. For now, it’s forging ahead solo while others are shaking hands.

✌️ VW and the Union Give Peace a Chance

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After long and intense negotiations, Volkswagen and its unions have struck a deal to secure jobs and cut costs—proving that even corporate giants and labor representatives can find common ground. But is this a win for everyone? Let’s dive in.

Why did VW need this agreement so badly?

Because “reduce overcapacity and labor costs” doesn’t quite have the same ring as “make Volkswagen great again.” Facing fierce competition and a shrinking European market, VW needed to cut costs to stay relevant—and profitable.

How much cutting are we talking about?

Oh, just a casual 35,000 jobs and 734,000 fewer cars rolling off German assembly lines by 2030. Don’t worry; it’s being done “responsibly.” Because nothing says “socially conscious” like telling 35,000 people they’re no longer needed.

What’s in it for the workers?

Job security through 2030 for those who stick around. Plus, VW promises “sustainable production” at German sites. Translation: If you’re not in the 35,000, you get to keep making electric Golfs and Cupra Borns while the rest of the world moves to Mexico and Puebla gets the Golf gig.

Is this really a ‘peaceful’ agreement?

Let’s just say it’s more of a tense truce. Workers keep jobs (mostly), VW cuts costs, and everyone hopes this €15 billion savings plan is enough to hold the company together through 2030.

What’s the big takeaway for dealers?

With VW rebranding itself as a tech leader and refocusing production, expect a tighter lineup of innovative models. Whether that translates to better margins or just fewer cars to sell, only time will tell. For now, it’s peace in our time—at least until the next labor dispute.

🚨 Canoo’s Bubble-Shaped Car Business Is Ready to Pop?

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Canoo, the EV startup with a quirky design and a turbulent history, has left employees on an unpaid break, signaling deeper troubles. With mounting financial woes and a precarious future, this might be the last chapter for the bubble-shaped car maker.

  • Mandatory Unpaid Breaks: Employees were told they’d be locked out of company systems and benefits halted by year-end. Canoo cited efforts to "secure capital," but with only $700,000 in the bank, optimism is in short supply.

  • Reverse Stock Split Hail Mary: Canoo announced a 1-for-20 reverse stock split to avoid Nasdaq delisting. While the move aims to attract investors, it feels more like rearranging deck chairs on a sinking ship.

  • Leadership Exodus: Since 2022, Canoo has seen all its founders, its CFO, and its general counsel leave, leaving behind a skeletal leadership team trying to keep the lights on.

  • Government-Only Clients: Once marketed to adventurous consumers, Canoo's vehicles have largely been limited to government contracts, highlighting its struggle to gain mainstream traction.

  • The Future Looks Dim: With idled factories, unpaid employees, and evaporating cash reserves, Canoo’s survival hinges on a miracle—or a massive injection of funds. For now, the bubble is stretched thin, and the pop seems imminent.

For real though, look at this thing

Canoo

💸 The Numbers Game: Tariffs and Tight Inventories

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Two major forces are shaping the automotive landscape: potential tariffs on imported goods and a tightening used-car market. Dealers must stay informed to navigate these changes and capitalize on opportunities.

Tariff Turmoil on the Horizon

New tariffs could drive vehicle prices up by $600 to $10,000, depending on the origin of parts. With globally interconnected supply chains, automakers and dealers will share the financial burden. While the immediate impact on sticker prices may be delayed, the long-term effects could reshape consumer buying habits.

  • Imported vehicle parts could see $600–$2,500 in added costs.

  • Cars assembled in Mexico or Canada might jump by $1,750–$10,000.

  • Loan rates are falling, offering some relief to buyers in 2025.

Tight Supply Meets Strong Sales

Used vehicles are in high demand despite inventory levels remaining flat at 2.18 million units. Lower-priced cars are increasingly scarce, with only 34 days’ supply under $15,000, forcing many consumers to spend more. Meanwhile, strong sales have pushed the average listing price to $25,565, reflecting seasonal trends and continued demand.

  • Used-vehicle sales rose 2% in November and 13% year-over-year.

  • Cars priced under $15,000 are 12 days below the industry average in supply.

  • Top-selling brands (Ford, Toyota, Honda) average $23,882 per unit.

Essential to know for dealers: Be ready to navigate consumer affordability challenges while leveraging falling loan rates and incentives to close deals. Staying flexible and data-driven will be key to success in 2025.

🌱 California’s EV Mandate: Progress or Pipe Dream?

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California’s plan to phase out gas-powered vehicle sales by 2035 sounds ambitious—maybe too ambitious. While states have the right to carve their own path, is it realistic to reshape an entire market around a vision that’s over a decade away? Let’s focus on what’s happening now, not what might (or might not) be in 2035.

Setting the Stage for Zero Emissions

The Advanced Clean Cars II regulation aims for 35% zero-emission vehicle sales by 2026, scaling up to 100% by 2035. It promises cleaner air and public health benefits, but the road there is paved with uncertainties. Can infrastructure, affordability, and consumer adoption keep pace with policy ambitions?

  • EV adoption is rising, but gas vehicles still dominate, making up 75% of sales today.

  • California has 150,000 public chargers but needs 250,000 more by 2030 to meet demand.

  • Governor Newsom’s proposed income-based EV rebates could exclude luxury brands, narrowing options.

The Future vs. the Now

Bold visions are inspiring, but today’s market realities show affordability challenges, tight inventory, and a reliance on gas-powered vehicles for the foreseeable future. Plug-in hybrids and traditional gas cars will remain on the roads for decades, fueled by cleaner-burning options like California’s Low Carbon Fuel Standard.

  • Battery prices are dropping, but EVs under $30,000 remain rare.

  • California’s mandate doesn’t outright ban gas vehicles, leaving room for hybrids and legacy models.

  • Infrastructure build-out takes time, with private home chargers already numbering 500,000 statewide.

Essential to know for dealers

While California is driving policy with a long-range goal, the day-to-day business of selling cars must balance consumer realities with market shifts. Prepare for all potential futures, but care for the present before you.

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