Honda / Nissan formally start merger talks, auto industry nears “breaking point,” used car sales surge

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Hey, everyone. PSA: Auto loan fraud is continuing to rise.

Despite a modest increase in fraud this year — analysts are forecasting a sharp uptick in 2025 — adding half a billion dollars to overall exposure.

As more of the transaction process happens digitally — this number will likely continue to grow without some serious intervention.

—CDG

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Welcome to The Weekly, your go-to roundup of the top five auto industry headlines of the week. Let’s dive in.

1. Honda, Nissan formally begin talks for possible $58B merger

Honda and Nissan are formally in talks to merge, with Mitsubishi potentially jumping in to create a $58 billion automotive group.

Why now? Japanese automakers have been slow to embrace electrification, and now they’re under pressure as Chinese EV brands like BYD and Nio capture global market share with affordable, tech-forward EVs.

• For Nissan, the merger offers a lifeline. The company has struggled since the 2018 arrest of former chairman Carlos Ghosn, followed by financial turmoil, including a substantial drop in earnings, major job cuts, and scaled-down production.

• For Honda, the merger will give the automaker access to Nissan's EV platforms, manufacturing plants, and intellectual property, fast-tracking its electrification efforts at a lower cost.

What’s next? The two automakers will spend the next six months hashing out details for a merger under a holding company, targeting completion by August 2026.

(Go deeper: 2 min. read)

Honda and Nissan are also positioned nicely to capitalize on some shifts in demand…

2. Buyers turn to smaller cars as new vehicle prices stay elevated

Sales of entry-level models like the Honda Civic and Nissan Sentra have surged over 23% this year, while midsize SUV sales have fallen 2.3% and large pickup sales are down 1.9%, according to The Wall Street Journal.

A closer look at pricing explains why: Kelley Blue Book’s “best” full-size SUVs for 2024 and 2025 average $64,363, while top-rated large pickups start at $46,100. Compare that to midsize cars, averaging $29,847, and it’s easy to see why buyers are shifting gears.

For some, larger vehicles remain essential for their needs. But for a growing number of shoppers, they’re simply too expensive to justify. As a result, many are downsizing to compact cars or crossovers, reflecting a broader shift in the market driven by affordability concerns.

(Go deeper: 1 min. read)

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Not only are buyers gravitating to small cars under the weight of affordability – but the used car market is seeing a surge of demand too…

3. Used car sales surge during holiday season

Used car sales saw a surprising boost in November, defying typical seasonal trends. Retail used-vehicle sales rose nearly 2% month-over-month to 1.42 million units, a 13% jump compared to last year, according to Cox Automotive.

By the numbers: Inventory, however, remained steady. Days’ supply dropped slightly to 46 in early December, compared to 47 in November and 55 a year ago. 

• Supply for vehicles under $15,000 was especially tight, with days’ supply falling below 34.

• The average used car listing price was $25,565  barely budging throughout the year.

Despite high prices and fewer selling days, consumer demand has stayed strong. November’s surge in sales shows the used market is resilient, even in the face of market pressures.

(Go deeper: 2 min. read)

Pressures that automotive industry leaders say are growing…

4. Auto execs warn of industry 'breaking point'

According to a new white paper from the SAE Detroit Section Global Leadership Conference the auto industry has six key challenges threatening its future:

1. Sales of electric vehicles remain too slow to justify massive investments.

2. Rising costs from increasingly software-defined vehicles demand greater collaboration to reduce expenses.

3. The U.S., Europe, Japan, and South Korea have hit peak demand, exacerbating production cost challenges.

4. Chinese automakers are rapidly expanding globally, contributing to a 6.6% loss in global market share for Detroit automakers.

5. Current engineering practices, especially for EVs, fail to meet modern demands

6. U.S. automakers lack the political influence of other industries, limiting their ability to shape policies.

The solution? In order to stay competitive — the paper urges legacy automakers to make bold reforms — and fast.

(Go deeper: 4 min. read)

But dealers say there’s another threat looming — one that’s causing state dealer associations to step in…

5. CNCDA sends cease-and-desist to Scout Motors

Volkswagen and Scout Motors are facing legal challenges from the California New Car Dealers Association (CNCDA), which issued a cease-and-desist letter over their direct-to-consumer sales strategy.

Driving the news: Backed by the National Automobile Dealers Association (NADA), the CNCDA claims this approach violates California’s franchise laws, which prohibit manufacturers from competing with their own dealers.

And despite Volkswagen’s ownership and funding, both automakers argue Scout operates independently, overseeing its own design, production, and sales.

Even though the CNCDA and NADA have warned of further action if direct sales continue, Volkswagen and Scout show no signs of retreating.

(Go deeper: 1 min. read)

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• VW reaches deal with German union, preventing layoffs and plant shutdowns.

• Stellantis ends Calif. emissions dispute with $4.2M settlement, Ram recalls.

• VinFast whistleblower claims rampant safety failures and rushed production.

• BYD faces fallout over “slavery-like” labor claims in Brazil.

• Satisfaction with public EV charging hits a speed bump.

That’s a wrap for now – make sure you’re following along on X, LinkedIn and IG for more real-time updates.

🚨 Hey you! Before you go…

Thanks for reading. Hit reply and let me know if you found this week-in-review valuable or have any feedback. I’ll see you next weekend.

—CDG

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