Merger talks between Honda and Nissan have collapsed after the firms failed to agree on a multi-billion-dollar tie-up.
The Japanese carmakers, along with junior partner Mitsubishi, had aimed to combine their businesses to fight back against competition from rival firms, especially in China.
The merger would have created an auto group worth $60bn (£48bn), and the world’s fourth-largest by vehicle sales after Toyota, Volkswagen and Hyundai.
The companies said they would continue their partnership on electric vehicles.
Karl Brauer, an analyst from online research platform iSeeCars.com, said the failure of the merger was not a total surprise.
“Plenty of automotive mergers have not worked out, and this one had as much potential for disaster as it did to help both brands,” he added.
The planned tie-up was seen as providing Nissan, which for a while was Japan’s second-largest car company, with crucial relief following years of slowing sales and turmoil involving its top executives.
Honda entered negotiations in a leading position. It remains a popular brand globally, producing and selling more cars than Nissan.
Nissan, meanwhile, has struggled to recover from a leadership crisis since the arrest of former chief executive and chairman Carlos Ghosn in late 2018.
Mr Ghosn was dismissed from his post over allegations of financial misconduct, which he denies, and has lived as a fugitive in his home country of Lebanon after being smuggled out of Japan in a music equipment box.
Nissan announced cost-cutting measures last year, including shedding 9,000 jobs globally, and halving its current chief executive’s pay.
Honda’s boss Toshihiro Mibe had said any merger would be “based on the assumption that Nissan completes its turnaround action”.
The companies eventually disagreed on what role Nissan would play in the merger – equal partner or subsidiary.
Jesper Koll, from Japanese online trading platform operator Monex Group, said the “pressure to make it appear like a merger of equals in Japan is very strong”.
“Having somebody leading this would seem almost offensive to the other party.”
Mr Koll also said Honda could have come off worse, adding: “You’re taking a potentially great company and taxing it with having to bail out an ugly duckling.”
