"It's not a pragmatic deal because frankly, the synergies between the two companies are difficult to find," Ghosn told Bloomberg.

Moody's gave a positive review of the potential merger of Honda and Nissan, but former Nissan CEO Carlos Ghosn warned his old employer would face "carnage" if the combination went through.

In a bold move to counter declining sales and mounting competition from Chinese automakers, Honda, Nissan, and Mitsubishi are in discussions to form a three-way merger. If finalized, the partnership will create the world’s third-largest carmaker, trailing only Toyota and Volkswagen in annual sales.