Honda and Nissan announced in December they were planning on holding talks to set up a joint holding company while Mitsubishi said later it was considering joining the group.
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Japanese car makers Honda, Nissan and Mitsubishi have revealed they are dropping plans to merge.
The car makers revealed the news in a joint statement following Honda and Nissan's announcement of the plans in December to which Mitsubishi later added that it was considering joining the group.
From the start, the effort had puzzled analysts who wondered what could be the advantages to any of the companies, as their model lineups and strengths overlap in an industry shaken by the arrival of powerful newcomers such as Tesla and BYD, as well as the move to electrification.
Details as to why the talks unravelled have not yet been revealed.
Honda and Nissan initially said they were trying to finalise an agreement by June and set up the holding company by August.
Electric vehicles and smart cars still appeal
The three car makers will continue to work together on electric vehicles and smart cars, such as autonomous driving, the companies said on Thursday.
In recent weeks, Japanese media had various reports about the talks breaking down, citing unidentified sources. Some said Nissan balked at becoming a minor player in the partnership with Honda.
Honda is in far better financial shape and was to take the lead in the joint executive team.
Nissan reported a loss for the July-September quarter as its vehicle sales sank, prompting it to slash 9,000 jobs. At that time, chief executive Makoto Uchida took a 50% pay cut to take responsibility for the results.
