Japanese auto giants Honda and Nissan are in preliminary merger talks to help them compete against Tesla and Chinese electric vehicle makers, media reports said Wednesday.Shares in Nissan soared as much as 24 percent, while Honda dipped more three percent. Mitsubishi Motors — of which Nissan is the top shareholder — gained almost 20 percent.Japan’s number two and three automakers behind Toyota had already agreed in March to explore a strategic partnership on EVs.”We are discussing possibilities for cooperation… in a wide range of fields and in various areas, and those possibilities include the latest reports, but there is nothing decided,” a Honda spokesman told AFP on Wednesday.Nissan said: “The content of the report is not something that has been announced by either company… If there are any updates, we will inform our stakeholders at the appropriate time.”Major automakers the world over have been reeling from tough competition in EVs, in particular from Chinese competitors such as BYD.Volkswagen, for instance, is considering closing German factories for the first time in its history.Last month, Nissan announced 9,000 job cuts, slashed its sales forecasts and said it would reduce global production capacity by 20 percent.Warning of a “severe situation”, CEO Makoto Uchida said he would forfeit half his salary.Nissan has seen a turbulent decade that included an attempted major alliance with France’s Renault that saw its former boss Carlos Ghosn arrested in 2018.In Paris, shares in Renault, which owns a significant stake in Nissan, soared more than six percent on Wednesday.- Electric race -Bloomberg reported that an approach by Taiwan’s Foxconn — officially known as Hon Hai Precision Industry — to take a controlling stake in Nissan accelerated discussions with Honda.Foxconn, the world’s largest contract electronics manufacturer including for Apple, was not immediately available for comment.Honda and Nissan are considering operating under a holding company and will soon sign a memorandum of understanding, the Nikkei reported.Their respective stakes, as well as other details, will be decided later, and they also look to eventually bring Mitsubishi Motors under the holding company, the paper said.The Financial Times reported that the exploratory talks about a merger were at an early stage.There are, however, concerns about a possible political backlash since a merger could result in significant job cuts, the FT reported.Japanese television channel TBS reported that the companies could make an announcement as early as Monday.Honda is considering several options including a merger, capital tie-up or the establishment of a holding company, executive vice president Shinji Aoyama told Bloomberg.- Overtaken -China overtook Japan as the world’s biggest vehicle exporter in 2023, helped by its dominance in EVs, a sector where Japanese firms have lost ground by focusing on hybrid vehicles.Honda announced plans in May to double investment in electric vehicles to $65 billion by 2030, part of its ambitious target set three years ago of achieving 100 percent EV sales by 2040.Nissan has signalled similar ambitions.It said in March that 16 of the 30 new models it plans to launch over the next three years would be “electrified”.The world’s auto giants are increasingly prioritising electric and hybrid vehicles, with demand growing for less polluting models as concern about climate change grows.At the same time, however, there has been a slowdown in the EV market on the back of consumer concern about high prices, reliability, range and a lack of charging points.”From Nissan’s perspective, the possible merger would provide short-term relief for Nissan, which is under significant financial pressure,” Tatsuo Yoshida, Bloomberg Intelligence analyst, told AFP.”From Honda’s perspective, Honda is performing better financially, the benefits for Honda would be more long-term,” Yoshida said, adding, however, that agreeing on a deal would be “very difficult”.burs-stu/mtp

Asian markets swung Wednesday ahead of the Federal Reserve’s much-anticipated policy announcement, while shares in Japanese car titan Nissan soared more than 20 percent after reports said it was in merger talks with rival Honda.There were few catalysts to drive region-wide activity before the US central bank’s interest rate decision, with Wall Street providing a negative lead as profit-takers moved in while economic data was mixed.The Fed is widely expected to cut borrowing costs for the third successive time when it concludes its gathering later in the day but the main focus is on its statement, with traders hoping for guidance on its plans for next year.With inflation coming down but hovering above the two percent target and the labour market still robust, decision-makers have been able to loosen their grip on policy since September amid optimism they can guide the economy to a soft landing.However, with Donald Trump set to re-enter the White House next month, pledging tax cuts, deregulation and tariffs on imports from China, there are fears that prices could be reignited, forcing the Fed to re-evaluate its rates timetable.”We are experiencing a whirlwind of change and uncertainty that profoundly affects global economies,” said Stephen Innes of SPI Asset Management.”Questions loom: Will Donald Trump be a ‘Deal Maker in Chief’ or lean into his ‘Tariff Man’ persona? How will bond yields react? Can China effectively stimulate consumer demand? Will Trump broker peace in Eastern Europe? Will the dollar maintain its oppressive strength?”He added that “the crucial question is whether the Federal Reserve will signal a pause starting from the January (policy) meeting”.”My view leans toward an affirmative; the real intrigue, however, lies in how explicitly the Fed will beam this potential shift and confirm a ‘hawkish cut’.”While Wall Street fell, Asian markets diverged. Hong Kong, Shanghai, Seoul, Bangkok and Taipei rose but Sydney, Singapore, Wellington, Mumbai, Jakarta and Manila fell.London rose even as data showed UK inflation picked up in November, firming expectations the Bank of England will hold off cutting rates this week.Paris and Frankfurt were also both up.Tokyo closed down, although Nissan scorched 23.7 percent higher soon after opening in response to reports it was in preliminary merger talks with Honda, adding the move would help them better compete against Tesla and other electric vehicle makers.Neither firm confirmed the reports but they agreed in March to explore a strategic partnership on EVs, which analysts said was aimed at catching up with Chinese competitors.Nissan has been struggling, announcing 9,000 job cuts last month and slashing its annual sales forecast.The rise was the biggest since 1974, according to Bloomberg News.Honda fell about three percent, while Mitsubishi Motors — of which Nissan is the top stakeholder — gained 19.7 percent.On currency markets, the yen edged down against the dollar ahead of the Fed decision, while traders also awaited the conclusion of the Bank of Japan’s Thursday meeting as debate swirls about when it will hike rates.Bitcoin pared gains after earlier hitting a record of more than $108,315 on Wednesday.- Key figures around 0810 GMT -Tokyo – Nikkei 225: DOWN 0.7 percent at 39,081.71 (close)Hong Kong – Hang Seng Index: UP 0.8 percent at 19,864.55 (close)Shanghai – Composite: UP 0.6 percent at 3,382.21 (close)London – FTSE 100: UP 0.2 percent at 8.210,72Euro/dollar: DOWN at $1.0497 from $1.0498 TuesdayPound/dollar: DOWN at $1.2687 from $1.2707Dollar/yen: UP at 153.57 yen from 153.41 yen Euro/pound: UP at 82.74 pence from 82.52 penceWest Texas Intermediate: UP 0.5 percent at $70.45 per barrelBrent North Sea Crude: UP 0.5 percent at $73.52 per barrelNew York – Dow: DOWN 0.6 percent at 43,449.90 (close)