TOKYO (AP) — Japanese automakers Honda, Nissan and Mitsubishi said Thursday they are ending talks on business integration.

Nissan Chief Executive Makoto Uchida said the talks had changed focus from setting up a joint holding company to making Nissan into a subsidiary of Honda.

“The intent was to join forces to win in the global competition, but this was not going to realize Nissan’s potential, so I could not accept it,” he told reporters. He said that Nissan was going to aim for a turnaround without Honda instead.

Honda Chief Executive Toshihiro Mibe said in a separate news conference that Honda had suggested a stock swap to speed up decision-making.

“I am really disappointed,” Mibe told reporters. “I felt the potential was great, but I also knew actions that would bring pain were necessary to realize that.”

The automakers agreed to end their agreement on considering a structure for a collaboration, a joint statement said. The decision was passed by board meetings at each of the companies.

Honda Motor Co. and Nissan Motor Corp. announced in December that they were going to hold talks to set up a joint holding company. Mitsubishi Motors Corp. had said it was considering joining that group.

From the start, the effort had analysts puzzled as to the advantages to any of the companies, as their model lineups and strengths overlap in an industry shaken by the arrival of powerful newcomers like Tesla and BYD, as well as the move to electrification.

Honda and Nissan initially said they were trying to finalize an agreement by June and set up the holding company by August.

The three automakers will continue to work together on electric vehicles and smart cars, such as autonomous driving, they said 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.

Mibe denied he knew or heard anything about the media speculation that Taiwan’s Foxconn was considering taking a stake in Nissan.

Uchida also denied have held any official talks with Foxconn but stressed that various options will be considered as Nissan attempts a turnaround, promising a more detailed turnaround plan within a month.

Honda is in far better financial shape and was to take the lead in the joint executive team. Honda reported Thursday that its April-December 2024 profits declined 7% to 805 billion yen ($5 billion).

Nissan reported a loss for the July-September quarter as its vehicle sales sank, prompting it to slash 9,000 jobs. At that time, Uchida took a 50% pay cut to take responsibility for the results.

On Thursday, Nissan reported that its April-December profit crashed to 5.1 billion yen ($33 million) from 325 billion yen ($2.1 billion) last year, and projected losses of 80 billion yen ($519 million) for the full fiscal year through March.

When asked by reporters if he would resign to take responsibility for Nissan’s results, Uchida expressed openness to departing but said it was the board’s decision.

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TOKYO (AP) — Japanese automakers Honda and Nissan have announced plans to join forces, forming world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels.

The two companies said they had signed a memorandum of understanding on Monday and that smaller Nissan alliance member Mitsubishi Motors also had agreed to join the talks on integrating their businesses.

“We anticipate that if this integration comes to fruition, we will be able to deliver even greater value to a wider customer base,” Nissan’s CEO Makoto Uchida said in a statement.

Automakers in Japan have lagged behind their big rivals in electric vehicles and are trying to cut costs and make up for lost time.

News of a possible merger surfaced earlier this month, with unconfirmed reports saying that the talks on closer collaboration partly were driven by aspirations of Taiwan iPhone maker Foxconn to tie up with Nissan, which has an alliance with Renault SA of France and Mitsubishi.

A merger could result in a behemoth worth more than $50 billion based on the market capitalization of all three automakers. Together, Honda and the Nissan alliance with Renault SA of France and smaller automaker Mitsubishi Motors Corp. would gain scale to compete with Toyota Motor Corp. and with Germany’s Volkswagen AG. Toyota has technology partnerships with Japan’s Mazda Motor Corp. and Subaru Corp.

Even after a merger Toyota, which rolled out 11.5 million vehicles in 2023, would remain the leading Japanese automaker. If they join, the three smaller companies would make about 8 million vehicles. In 2023, Honda made 4 million and Nissan produced 3.4 million. Mitsubishi Motors made just over 1 million.

Nissan, Honda and Mitsubishi announced in August that they would share components for electric vehicles like batteries and jointly research software for autonomous driving to adapt better to dramatic changes centered around electrification, following a preliminary agreement between Nissan and Honda set in March.

Honda, Japan’s second-largest automaker, is widely viewed as the only likely Japanese partner able to effect a rescue of Nissan, which has struggled following a scandal that began with the arrest of its former chairman Carlos Ghosn in late 2018 on charges of fraud and misuse of company assets, allegations that he denies. He eventually was released on bail and fled to Lebanon.

Speaking Monday to reporters in Tokyo via a video link, Ghosn derided the planned merger as a “desperate move.”

From Nissan, Honda could get truck-based body-on-frame large SUVs such as the Armada and Infiniti QX80 that Honda doesn’t have, with large towing capacities and good off-road performance, Sam Fiorani, vice president of AutoForecast Solutions, told The Associated Press.

Nissan also has years of experience building batteries and electric vehicles, and gas-electric hybird powertrains that could help Honda in developing its own EVs and next generation of hybrids, he said.

But the company said in November that it was slashing 9,000 jobs, or about 6% of its global work force, and reducing its global production capacity by 20% after reporting a quarterly loss of 9.3 billion yen ($61 million).

It recently reshuffled its management and Makoto Uchida, its chief executive, took a 50% pay cut to take responsibility for the financial woes, saying Nissan needed to become more efficient and respond better to market tastes, rising costs and other global changes.

Fitch Ratings recently downgraded Nissan’s credit outlook to “negative,” citing worsening profitability, partly due to price cuts in the North American market. But it noted that it has a strong financial structure and solid cash reserves that amounted to 1.44 trillion yen ($9.4 billion).

Nissan’s share price also has fallen to the point where it is considered something of a bargain.

On Monday, its Tokyo-traded shares gained 1.6%. They jumped more than 20% after news of the possible merger broke last week.

Honda’s shares surged 3.8%. Honda’s net profit slipped nearly 20% in the first half of the April-March fiscal year from a year earlier, as sales suffered in China.

The merger reflects an industry-wide trend toward consolidation.

At a routine briefing Monday, Cabinet Secretary Yoshimasa Hayashi said he would not comment on details of the automakers’ plans, but said Japanese companies need to stay competitive in the fast changing market.

“As the business environment surrounding the automobile industry largely changes, with competitiveness in storage batteries and software is increasingly important, we expect measures needed to survive international competition will be taken,” Hayashi said.

Kurtenbach reported from Bangkok.