Nissan Backs Away from Honda Merger, Claim Japanese Company SourcesNissan Backs Away from Honda Merger, Claim Japanese Company Sources

Nissan and Honda are reportedly cooling to the idea of a full merger and may water it down to an agreement for more business collaboration.

The speculation, mirroring predictions by WardsAuto staff writer David Kiley, is touted by the Japanese Nikkei newspaper suggesting the proposed deal has hit the buffers.

Company sources now also tell the Reuters news agency that Nissan is set to call off merger talks with Honda turning its back on a $60 billion tie-up that would have created the world's third-largest automaker group.

Sources close to the matter say the talks stalled on disputes around business strategies between the two companies. The Tokyo Stock Exchange reacted to the Nikkei report by slashing 4% off Nissan’s share price while pumping up Honda’s stock value by 8%.

Industry-watchers now remain unsure how troubled Nissan, currently in the middle of a turnaround plan and aiming to cut 9,000 employees and 20% of global capacity, can cope without external help.

However, both Nissan and Honda say in separate statements that the Nikkei report was not based on information announced by the companies and that they aim to finalize a future direction by mid-February and announce it at that time.

One source is reported to claim Honda became increasingly concerned over the progress of Nissan’s turnaround plans.

Nissan, the smaller company, is also more exposed to potential U.S. tariffs against Mexico with greater dependency on the cheap labor south of the border for its products.