Japanese automakers Nissan and Honda have announced plans to work toward a merger that would catapult them to a top position in an industry in the midst of tectonic shifts as it transitions away from

Honda and Nissan have started talks toward a potential merger, they said on Monday, a historic pivot for Japan's auto industry that underlines the threat Chinese EV makers now pose to some of the world's best known car makers.

Nissan and Honda agreed to consider a merger and set up a joint holding company, which would create the world's third-largest automaker.

Honda and Nissan are seeking to create a new force in the global automotive industry as carmakers face an existential crisis. A week after the Japanese companies were reported to have explored a merger,

Japanese automakers Nissan and Honda on Monday announced they had entered into official talks to merge and create the world’s third-largest automaker by sales.

The two companies said they had signed a memorandum of understanding and smaller Nissan alliance member Mitsubishi Motors also agreed to join the talks.