Reports emerging from Germany on Tuesday had suggested that the Japanese manufacturer had cancelled the deal, in the wake of the departure of team principal Monisha Kaltenborn.

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

That has led to a situation where Sauber's owners have in recent days decided that they would now prefer to look elsewhere for a power unit for 2018, so 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."

Different opinions

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

At the time Pascal Picci, chairman of Sauber owners 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 departure. In effect, the new owners decided that the team could not afford to be uncompetitive next season, and that it had to focus on getting a decent engine.

The team has already faced a struggle for form in 2017 after Kaltenborn committed it to running year-old Ferrari engines, which are not being developed.

Picci was unavailable for comment.

2017 options

It's not yet clear what route the Swiss outfit will take now.

While extending its long-time deal with Ferrari is the most obvious option, it's 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 deal next deal, if McLaren does go down the Ferrari route then the German car manufacturer could do a deal with Sauber, especially since the Swiss team currently runs junior Pascal Wehrlein.

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

However, one source has suggested that the expected announcement of former Renault F1 team boss Fred Vasseur as the new team principal at Sauber could derail any deal, in the wake of the Frenchman's departure from the Enstone camp 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.

On the one hand it guaranteed a presence in the 2018 field even if there was a split with McLaren, allowing Honda to continue to develop its power unit in racing conditions.

On the other hand it would have meant that 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.