Nissan shares plunged on Wednesday as reports said the struggling Japanese carmaker was walking away from merger talks with rival Honda.

The Nikkei business daily and other local media earlier said Honda had proposed making Nissan its subsidiary, instead of the previous plan to integrate under a new holding company.

"Strong opposition" within Nissan to this proposal was behind its decision to withdraw from the talks, the Nikkei said. Private broadcaster TBS published a similar report.

Discussions on setting up a holding company were launched in December but faltered as the two companies disagreed on the integration ratio and other conditions, the newspaper added.

Nissan said in a statement it had not announced anything officially, but the two companies "are in the stage of advancing various discussions, including the contents of the report".

"We plan to establish a direction and make an announcement around mid-February." 

The company's shares plunged 4.8 percent before the Tokyo Stock Exchange suspended their trading, saying the media reports on the merger's cancellation needed to be verified.

Honda, however, closed 8.2 percent higher, having soared nearly 12 percent at one point.

Nissan and Honda agreed in December to start talks on joining forces to create the world's third-largest automaker -- seen as a bid to catch up with Tesla and Chinese electric vehicle firms.

Honda's CEO insisted at the time it was not a bailout for Nissan, which last year announced thousands of job cuts after reporting a 93 percent plunge in first-half net profit.

Business has been tough for foreign brands in China, where electric vehicle manufacturers such as BYD are leading the way as demand grows for less polluting vehicles.

China overtook Japan as the biggest vehicle exporter last year, helped by government support for EVs.

Honda and Nissan are Japan's number two and three automakers after Toyota.

They already agreed last year to explore a partnership on EV software and components among other technologies, an initiative joined by Mitsubishi Motors in August.

But the smaller automaker's chief said this week it would make a final decision on whether to join the Honda-Nissan merger talks in mid-February or later.

In December, reports said Taiwanese electronics behemoth Foxconn had unsuccessfully approached Nissan to acquire a majority share.

It then reportedly asked Renault to sell its 35 percent stake in Nissan -- a pursuit that was put on hold before the merger talks were announced.

Nissan has weathered a turbulent decade, including the 2018 arrest of former boss Carlos Ghosn, who later jumped bail and fled Japan concealed in a music equipment box.

The company is also saddled with billions of dollars of debt that will reportedly mature over the next two years.