Together, Honda and Nissan would also pose more of a threat to Toyota Motor Corp., which is the world’s biggest automaker followed by Volkswagen AG.

The merger talks between Honda and Nissan are the latest example of companies trying to respond to the competitive threat from China.

Honda and Nissan have strong presences in major markets like North America, Europe, and Japan. However, they are struggling in China. “Both Honda and Nissan have significant overcapacity issues in China, which requires optimization before any merger talks, James Hong, an analyst at Macquarie Securities Korea Ltd., said.

This merger could create the world’s third-largest automaker, with combined resources to dominate the EV market. Honda and Nissan hope to outpace rising Chinese brands like BYD and Nio.

After kicking off discussions on Monday, Honda and Nissan said they plan to provide more details on Mitsubishi’s involvement around the end of January 2025. The EV merger is expected to be official by August 2026.

A Honda Motor Co. and Nissan Motor Co. combination could give the two struggling Japanese brands the scale to take on China’s BYD Co., sales figures released Wednesday show.

Nissan sold just over 3 million, according to a separate statement. China’s biggest automaker BYD sold 3.76 million vehicles over the same period, a clear illustration of how weak Nissan and Honda are alone, but how together, they may stand a fighting chance.

Here's a quick look at what a combined Honda and Nissan would mean for the companies, and for the auto industry.

Honda Motor Co’s proposed acquisition of Nissan Motor Co could provide the scale needed to challenge China’s BYD Co, sales data revealed Wednesday. The move highlights mounting pressure on Japanese automakers to compete in a market increasingly dominated by China’s burgeoning automotive industry.

"Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future,” said Nissan Director, President, CEO, and Representati