The firms said they "have agreed to terminate the Memorandum of Understanding (MOU) signed on December 23 last year to consider business integration between the two companies."

The firms' intention to join forces was seen as an effort to catch up with US titan Tesla and Chinese firms in the electric car market.

Honda's chief executive insisted in December that it was no help to Nissan, which last year announced thousands of job cuts after reporting a 93% drop in first-half net profit.

Japanese media reported that the discussions broke down after Honda offered to make its struggling rival a subsidiary instead of the plan announced in December to integrate under a new holding company.

The automakers confirmed that Honda "has proposed a change of structure from a joint holding company to a structure in which Honda would be the parent company and Nissan would be a subsidiary through a share swap."

The companies further stated that after the discussions they had decided that "in order to prioritise speed of decision making and implementation of management measures in an increasingly volatile market environment entering the electrification era, it would be most appropriate to terminate the discussions and end the MoU".

However, they added that they would continue to "collaborate within a strategic partnership focused on the era of smart and electrified vehicles, seeking to create new value and maximise the corporate value of both companies".

The termination of the merger talks will have no impact on the earnings of the two automakers.

Honda reported a net profit of 805.3 billion yen ($5.2 billion) for the nine months to December.

That was down 7.4 percent year-on-year, mainly due to a drop in sales in China, although overall ones rose 8.9 percent to 16.3 trillion yen.

Honda made a slight change in its full-year sales forecast to March, to 21.6 trillion yen from 21.0 trillion yen in the previous forecast. However, the company kept its operating and net profit forecasts at 1.42 trillion yen and 950 billion yen, respectively. | BGNES