Honda Motor Co (TYO:7267) and Nissan Motor (TYO:7201) are discussing collaborating again, months after their failed merger talks, as US tariffs squeeze profits, Nikkei Asia reported Friday.

Honda President Toshihiro Mibe said a merger is off the table for now but confirmed ongoing discussions. Nissan's Ivan Espinosa also acknowledged talks, focusing on the US market, according to the report.

The two companies began exploring cooperation on EVs and autonomous driving in 2024. Merger talks collapsed in December over control issues but relations have improved after Nissan's leadership change and restructuring, the report said.

US tariffs of 25% on imported cars and parts have added urgency. Honda expects a 70% drop in annual net profit, while Nissan sees a 450 billion yen ($3.09 billion) hit, according to the report.

They are considering joint battery supply from Honda's US plant with LG from 2028, joint research on software, and standardizing EV drive units, the report said.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)