Japanese carmakers Nissan and Honda sent shockwaves across the globe when they announced plans to merge in December of last year. But after just over a month, both companies have confirmed ending talks about integrating their businesses.

Nissan rejected Honda’s proposal to make it a subsidiary through a share exchange program. This is a complete change from the initial plan of starting a joint holding company.

Meanwhile, according to a report from the Associated Press, Honda was saddened by this recent development, citing the “great potential” of the deal. Honda chief executive Toshihiro Mibe added that tough decisions should be made to realize the merger’s potential.

Mitsubishi, having an alliance with Nissan, was also a party to the talks. However, rumors said that the company wanted to remain independent, and was still evaluating the possibility of joining the deal.

According to another AP report, Nissan had just a ¥5.1-billion ($33 million) profit for April to December, crashing by a whopping 98% from last year’s ¥325-billion earnings.

Nissan has released a progress report about its comprehensive turnaround measures. In the report, the firm says it plans to reduce labor costs and consolidate production lines of three plants in the United States and Thailand.

Honda has reported a 7% decline in profit for the first nine months of its fiscal year. This was due to the declining sales in China and Japan. However, its motorcycle business and US automotive sales remain strong.

Pundits have been puzzled wondering what benefits the companies stand to gain by entering this deal. This is because Nissan’s and Honda’s model lines and strengths overlap.

However, experts say that Honda stands to benefit from Nissan’s portfolio of large vehicles like truck-based body-on-frame vehicles, as well as battery and EV technologies. On the other hand, Honda’s better financial standing can help Nissan with its woes.

Despite the end of the merger talks, the collaboration between the three companies will continue to develop intelligence and electrification technologies.