Fiat Chrysler Automobiles' proposed merger with French automaker Renault quickly came to a halt Wednesday.
FCA said after its second day of negotiations with Renault that it would withdraw its merger offer that would have made a combined company the world's third-largest automaker. Renault said that it would postpone its decision.
Both parties hinted that the French government's interest in Renault and its larger Alliance with Nissan and Mitsubishi was a major sticking point.
"FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been carefully balanced to deliver substantial benefits to all parties. However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully," the American automaker said in a statement.
Renault delivered a more tempered view.
"The Board of Directors was unable to take a decision due to the request expressed by the representatives of the French State to postpone the vote to a later Council," a Renault statement said.
Reports out of Paris indicated that Nissan's relationship with Renault was an additional challenge. Nissan has two members appointed to Renault's board of directors.
FCA proposed a 50/50 merger in late May that could have aligned Renault with or without its Alliance partners Nissan and Mitsubishi.
The unsuccessful merger talks mean that FCA may next approach French automaker PSA, which operates the Peugeot and Citroen brands. While PSA is not beholden to a major automotive stakeholder, 13 percent of the company is owned by the French government.