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Sauber's deal to run Honda engines in Formula 1 in 2018 has been called off, according to multiple sources.

Reports emerging from Germany on Tuesday had suggested Honda had cancelled the deal, following the departure of team principal Monisha Kaltenborn.

But sources with good knowledge of the situation have indicated matters are slightly different, and that the contract between Sauber and Honda announced earlier this year was never officially completed and activated.

That has led to a situation where Sauber's owner has in recent days decided it would now prefer to look elsewhere for a engine for 2018, meaning the Honda deal will not happen.

When asked for a response to the situation, a Honda spokesperson said: "This is purely media speculation, and we do not comment on speculation.

"Honda's relationship with Sauber has not changed."

The Honda deal had been put together by Kaltenborn, who left the team shortly before the Azerbaijan Grand Prix.

At the time Pascal Picci, chairman of Sauber owner Longbow Finance, said that Kaltenborn's departure was "by mutual consent and due to diverging views of the future of the company".

It is believed that a disagreement over the Honda deal was one of the reasons behind Kaltenborn's sudden exit.

In effect the new owner decided that the team could not afford to be uncompetitive next season, and that it had to focus on getting a decent engine.

Sauber has already struggled for form in 2017 after Kaltenborn committed it to running year-old Ferrari engines, which are not being developed.

Picci was unavailable for comment.

It is not yet clear what route Sauber will take for an engine now.

While extending its long-time deal with Ferrari is the most obvious option, it is understood that might not be so straightforward, in part because McLaren has emerged as a surprise contender for a second customer supply deal alongside Haas.

McLaren had been widely tipped to secure Mercedes engines if its split with Honda went ahead, but there is now understood to be a chance of an alliance with Ferrari.

With Mercedes open to supplying an extra customer next year, if McLaren goes with Ferrari then Mercedes could do a deal with Sauber - especially since the Swiss team currently runs its junior Pascal Wehrlein.

Renault Sport's Cyril Abiteboul recently confirmed that the French manufacturer is able to supply another team in 2018.

But one source has suggested the announcement of former Renault F1 team boss Fred Vasseur as the new team principal at Sauber could derail any deal, given Vasseur's departure from Renault at the end of last season.

It remains to be seen what impact the collapse of the Sauber deal will have on Honda's wider plans.

The Sauber arrangement guaranteed Honda a presence in the 2018 F1 field even if there was a split with McLaren, allowing it to continue to develop its engine in racing conditions.

But being committed to Sauber would have meant Honda could not make a clean break from F1 by ending its deal with McLaren, or take a 'sabbatical' and spend a season or two developing its engine away from the spotlight of a racing season.