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.

The Japanese car giants say the proposed merger would give them the scale to better compete on the global market.

Honda Motor Co. and Nissan Motor Co. took their first historic steps toward merging, in hopes of creating a juggernaut that can survive aggressive competition from China that’s roiling the industry.The two Japanese auto manufacturers signed a basic agreement for merger talks on Monday and held a joint media briefing in Tokyo.