Two of Japan’s largest automakers have been in talks to combine their operations to form one of the world’s biggest car groups.

Nissan backed out of negotiations with Honda in a deal that would have created the third largest automaker in the world, the report said.

TOKYO — Nissan is set to call off merger talks with rival Honda, a source said Wednesday, abandoning a $60 billion-plus tie-up that would have created the world's No. 3 automaker and raising questions about how it will drive a turnaround by itself.