Honda Motor Co. and Nissan Motor Co. took their first historic steps toward merging and creating a new force in the world’s automotive industry as aggressive competition from China forces legacy carmakers to rethink their business models.

Among the reasons for Honda Motor Co. to enter merger talks with Nissan Motor Co., one looms large: China. Most Read from BloombergReviving a Little-Known Modernist Landmark in BuffaloThe Architects Who Built MiamiHo Chi Minh City Opens First Metro Line After Years of DelayNew York’s Congestion Pricing Plan Still Faces Legal HurdlesNew York City’s Historic Preservation Movement Is Having a Midlife CrisisThe surging popularity of electric and hybrid vehicles made by BYD Co.

Japan’s second- and third-largest automakers hope the deal can help them catch up with Tesla and China’s BYD in electric vehicles and advanced software.