A tie-up with Honda could help Nissan solve a big problem, car dealers said: It doesn't have any hybrids. A merger could fix that.

The proposed deal aims to unify operations under a joint holding company, led by Honda, while maintaining the distinct identities of each brand, according to Honda's president, Toshihiro Mibe. If finalized, the merger would position the combined entity to better compete with market leaders Toyota and Volkswagen.

Nissan Motor CEO Makoto Uchida (L), Honda Motor CEO Toshihiro Mibe (C) and Mitsubishi Motors President Takao Kato (R) pose during a photo session to announce merger talks. Honda’s U.S. shares are soaring.