However, Nissan had once said production of the X-Trail in Sunderland would create hundreds of additional jobs at the complex.
Nissan had said in 2016 that it would make the new X-Trail and Qashqai models at its Sunderland plant after receiving "assurances" from the government over Brexit.
The Business Secretary Greg Clark was on Monday night facing criticism after it emerged that he offered Nissan an £80million Brexit sweetener despite previously insisting there had been "no chequebook" involved in the deal.
Merkel said questions about the backstop could be discussed in the so-called political agreement that accompanies the Brexit deal, adding: "We need to show creativity, we need to listen to each other".
A source said Nissan received a letter from the government at the time promising extra support in the event that Britain's departure from the European Union hit the competitiveness of its Sunderland plant in north-east England.
Nissan's decision to axe planned production of the X-Trail SUV in the Brexit-backing city of Sunderland is a heavy blow to the British auto sector, which repeatedly warned against quitting the EU.
The up to £80 million of support for skills, research and development, and innovation, was contingent on the new Qashqai and X-Trail models being built in Britain, Clark wrote.
"They will be invited to re-submit an application in the light of the changed investments that they are making". Nissan had given some of the comments regarding its decision by saying that since the year 2016, the vehicle industry has been facing a changed environment in Europe dramatically which included the change in emissions of the regulations.
Unions expressed disappoint, as Nissan has made cars at its Sunderland plant since 1986, where it has up to 7000 employees.
"[Nissan] have reiterated today their commitment to the United Kingdom by continuing to manufacture in Sunderland the current Qashqai, Leaf and Juke models and the new Qashqai model from 2020".
The continued uncertainty over Brexit "is not helping companies like ours to plan for the future", said Nissan Europe Chairman Gianluca de Ficchy.
Many Japanese companies had long seen Britain as the gateway into Europe, after being encouraged to open factories in the country by former prime minister Margaret Thatcher but Brexit has thrown that into doubt, prompting consternation in Tokyo.
It is another sign of the decline of British automotive manufacturing, on which Fleet Europe reported last week.