Honda Motor Co. (TYO:7267) and Nissan Motor Co. (TYO:7201) shares surged on Wednesday after reports suggested they may abandon merger plans. Honda's stock rose 2.9%, while Nissan gained 4.3%. Toyota Motor Corp. (TYO:7203) also climbed 1.7%, with the Nikkei 225 index increasing by 0.3%.
According to Japan’s Asahi Shimbun, Honda and Nissan's boards will soon discuss terminating merger talks. Honda reportedly proposed making Nissan its subsidiary, a move strongly opposed by Nissan executives. The two companies had initially announced merger discussions last year, aiming to create the world’s third-largest automaker, trailing only Volkswagen (ETR:VOWG_p) and Toyota (NYSE:TM).
The potential cancellation could be a significant setback for Nissan, Japan’s third-largest automaker, which is struggling amid a global shift to electric vehicles, particularly in China. The company has been working to regain market share but faces strong competition from EV leaders like Tesla and BYD.
Japanese automakers are also navigating uncertainty over U.S. trade policies. President Donald Trump recently postponed a proposed 25% tariff on Mexico, a crucial manufacturing hub, by 30 days.
If the merger falls through, Honda and Nissan will need to reassess their strategies to stay competitive in an evolving global auto market.
