The deal, which was revealed in April, would have seen the Swiss team exchange their current Ferrari engines for power units from the Japanese auto giant, who currently supply solely McLaren.
“It is very unfortunate that we have to discontinue the planned collaboration with Honda at this stage,” stated Sauber’s new team principal Frederic Vasseur.
“However, this decision has been made for strategic reasons, and with the best intent for the future of the Sauber F1 Team in mind.
“We would like to thank Honda for their collaboration, and wish them all the best for their future in Formula One.”
Honda said the project had been called-off due to “differences in the future direction between Honda and Sauber, recognized during the preparation process for power unit supply systems”.
“We had built a good relationship with Sauber, and had been looking forward to entering the 2018 F1 season together,” stated Masashi Yamamoto, General Manager, Motor Sports Division, Honda Motor Co., Ltd.
“However, during discussions after management changes at the team, we reached a mutual agreement to call-off the project due to differences in the future directions of both parties.
“We would like to thank Sauber for their cooperation, and wish them all the best for their future.
“Despite this announcement, Honda’s passion for motorsports and strong commitment to Formula One remains unchanged.”
Honda returned to F1 competition with McLaren for the 2015 season, but have struggled to get to grips with the current generation of V6-hybrid power units, with the team scoring just two points so far this year.