Two of Japan's leading automobile companies, Nissan and Honda, are likely to call off their merger, if reports, including a leading Japanese newspaper, are to be believed.

The reports suggest that both companies have failed to reach a consensus, which may lead to abandoning of the more than $60 billion deal.

However, neither company has officially announced or released a statement regarding the situation. They had planned to announce the deal in mid-February.

Following a report in the Nikkei business daily, Nissan’s shares declined by 4% on the Tokyo Stock Exchange, after which trading was temporarily suspended.

Both automobile companies rank among the top car manufacturers globally, following Toyota. And if this merger happens, they would together can become the third-largest producer of cars.

Why the merger?

The carmakers first explored the possibility of a partnership for EVs in March. The merger talks followed rumours of Nissan’s financial troubles, with the company reportedly facing the possibility of bankruptcy.

The talks began after both companies ended their partnerships with other automobile giants – Nissan terminated its alliance with Renault, while Honda ended its partnership with General Motors (GM).

In March 2024, the two companies signed a partnership to focus on electric vehicle development.

Why may the merger be called off?

Reportedly, the merger talks may have collapsed after Honda proposed that Nissan become a subsidiary.

The original plan was to create a new holding company with both companies as equal subsidiaries.

As the two parties have not yet reached an agreement, the merger is now uncertain, suggested the reports.