A sign marks the location of a Honda dealership on 18 December 2024 in Libertyville, Illinois. Honda, Japan's second largest automaker is in talks to merge with Nissan, Japan's third largest automaker.
Scott Olson/Getty Images/AFP
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Honda shares surged in Tokyo on Wednesday as Japanese media said the automaker had proposed making its struggling rival Nissan a subsidiary —with some reports saying the move could spell the end of their merger talks.
The companies agreed in December to launch discussions on joining forces to create the world's third largest automaker, seen as a bid to catch up with Tesla and Chinese electric vehicle firms.
Honda's CEO insisted at the time it was not a bailout for Nissan, which last year announced thousands of job cuts after reporting a 93 percent plunge in first-half net profit.
Japanese public broadcaster NHK and other media outlets reported Tuesday that Honda was offering to acquire Nissan shares and make it a subsidiary, instead of the previous plan to integrate under a new holding company.
But the proposal is expected to face fierce opposition from Nissan over concerns over its autonomy, the reports said.
Honda shares jumped more than four percent in morning trading on Wednesday. Nissan shares were also up more than four percent.
A Honda spokeswoman told AFP there had been no official announcement and declined to comment further. Nissan was not immediately available for comment.
The Asahi newspaper said both companies would soon hold separate board meetings to discuss issues including the possibility of calling off the talks.
The Yomiuri daily cited an unnamed Nissan executive as saying the merger was now "almost impossible," with difficulties satisfying shareholders on either side.
Lacklustre consumer spending and stiff competition in several markets are making life hard for many automakers.
Business has been especially tough for foreign brands in China, where electric vehicle manufacturers such as BYD are leading the way as demand grows for less polluting vehicles.
Honda and Nissan are Japan's number two and three automakers after Toyota.
They already agreed last year to explore a partnership on EV software and components among other technologies, an initiative joined by Mitsubishi Motors in August.
But the smaller automaker's chief said this week that it will make a final decision on whether to join the Honda-Nissan merger talks in mid-February or later.
