Honda-Nissan deal in doubt weeks after talks began

Japan's Honda Motor and Nissan Motor called into question an agreement reached less than two months ago to consider combining, casting doubt on their efforts to form one one of the world's largest automakers.

The pair are discussing various options, including the possibility of withdrawing from deal talks, according to separate statements issued on Wednesday. The companies were responding to an earlier Nikkei newspaper report that said Nissan will pull out of an agreement with Honda because the two sides are unable to agree on terms.

A collapse of the discussion would spell trouble for Nissan, which was counting on its Japanese peer for a lifeline. Its standing in the global auto industry has steadily deteriorated over the last half decade due to listless leadership and an uncompetitive product lineup.

Honda shares rose 8.2% on Wednesday, while Nissan slumped 4.9% before the Tokyo Stock Exchange suspended trading due to the Nikkei report. Shares in France's Renault, Nissan's biggest shareholder, fell as much as 3.4% in Paris. Honda and Nissan reiterated that they plan to make an announcement about their future around mid-Feb. The companies had already postponed plans to offer an update on the direction of their potential integration by the end of last month.

Friction emerged this week after several media outlets reported that Honda had floated the idea of acquiring Nissan and making it a subsidiary. That proposal was a departure from plans made public on Dec 23 to establish a joint holding company and was met with strong opposition within Nissan. bloomberg