Honda and Nissan have not denied the story, which was first reported by Japanese business newspaper Nikkei, but said it was “not what was announced by both companies.”
Discussions are believed to be at an early stage and there is no guarantee that a deal will be agreed.
“If there are any updates, we will inform our stakeholders at the appropriate time,” they added.
The two companies are expected to officially confirm that they have held talks as early as next week, according to Japanese television channel TBS.
Nissan declined to comment on Bloomberg’s report that Foxconn had approached it about the iPhone maker taking a controlling stake in the car company. Foxconn did not immediately respond to the BBC’s request for comment.
A potential merger between Japan’s number two and number three automakers could be difficult for several reasons.
Any deal is likely to be the subject of intense political scrutiny in Japan as it could lead to major job cuts. Nissan is also likely to face a break in its alliance with French carmaker Renault.
In March, Honda and Nissan agreed to collaborate on electric vehicles, and in August they deepened their relationship by agreeing to work together on batteries and other technologies.
In August, the two companies also announced agreement with Mitsubishi Motors, external discuss intelligence and electrification., external
Nikkei also reported that Nissan and Honda could eventually bring Mitsubishi into any potential partnership. Nissan is Mitsubishi’s largest shareholder.
Nissan shares rose more than 23% in Tokyo on Wednesday. Honda shares fell about 3%, while Mitsubishi jumped nearly 20%.
“The idea that some of these smaller players can survive and thrive is becoming increasingly difficult, especially when you add the complexity of all the additional Chinese manufacturers that have emerged and are competing quite strongly,” Edmunds analyst Jessica Caldwell said.
“It’s just necessary to survive, not just to survive, but just to afford the future.”
Honda and Nissan are losing market share in China, which accounted for nearly 70% of global electric car sales in November.
The two brands will have combined global sales of 7.4 million vehicles in 2023, but are struggling to compete with cheaper electric car makers such as BYD, whose quarterly profits soared to beat Tesla for the first time in October.
Jesper Kohl of Japanese online trading platform operator Monex Group questioned whether the merger could make the companies more competitive.
“Is this just rearranging the deckchairs on the Titanic in the sense that neither Honda nor Nissan really have the products or technology that global consumers need?”
“From that point of view, it’s a good rescue, but it’s not the creation of a new national champion.”
Additional reporting by Peter Hoskins.
