Honda Motor Co Ltd (TYO:7267) and Nissan Motor Co., Ltd. (TYO:7201) shares rose on Wednesday following a report that they may call off plans to merge and form the world’s third largest automobile maker.
Honda’s Tokyo shares rose 2.9% after the report, while Nissan added 4.3%. Larger rival Toyota Motor Corp (TYO:7203) rose 1.7%, while the Nikkei 225 index added 0.3%.
The boards of Honda and Nissan will meet in the near future to discuss potentially calling off merger talks, Japan’s Asahi Shimbun newspaper reported, citing multiple sources with knowledge of the matter.
Honda (NYSE: HMC) proposed that Nissan (OTC: NSANY) become a subsidiary of the company- an idea that Nissan vehemently opposed, the Asahi report said.
Honda and Nissan had announced last year that they were in talks to merge their businesses, potentially forming the world’s third-largest auto firm by sales, after Volkswagen (ETR: VOWG_p) and Japanese peer Toyota (NYSE: TM).
The cancellation of the merger would hit Nissan- Japan’s third-largest automaker- particularly hard, given that the company is struggling with sales in a global shift towards electric vehicles, especially in major market China.
Japanese automakers are also facing increased uncertainty over U.S. trade tariffs under President Donald Trump, especially in Mexico, which is a major manufacturing hub. Trump this week postponed a 25% trade tariff against Mexico by 30 days.
