The merger fell apart due to Nissan's "pride and denial," as well as its refusal to close factories, while Honda's move to make the carmaker its subsidiary further clouded the fate of the deal, according to a Reuters report. Honda was also reportedly pushing for deeper staff cuts at Nissan.
In December, Honda and Nissan began merger discussions to create the world's third-largest automaker by vehicle sales, with talks set to conclude in June.
In a news conference in December, Honda CEO Toshihiro Mibe had said that the deal aimed at sharing intelligence and resources and delivering economies of scale and synergies while protecting both brands.
Nissan shares rocketed 24% on Dec. 18 over media reports about the merger, marking the stock's best day since at least 1985.
The merger was announced a month after Nissan posted downbeat results for its second quarter ended September, and revealed that it would slash 9,000 jobs and cut global production capacity by a fifth.
