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.

Both companies are grappling with intense global competition in the electric vehicle market from the likes of Tesla and China’s BYD.