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.

In 1993, GM had controlling interest in Isuzu and signed a deal to supply its Rodeo to become Honda’s first SUV, rebadged the Passport. The Isuzu Trooper was then rebadged to become the Acura SLX, and GM’s Japanese brand got the Honda Odyssey minivan to become the Isuzu Oasis.

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.

Honda did not respond to Business Insider's request for comment. Honda CEO: Merger is not a Nissan rescue. Honda's shares had initially fallen when news first broke of the merger

Japanese automakers Honda and Nissan will attempt to merge and create the world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels.

Facing extreme competitive pressure from the rise of Chinese EV makers, the Nos. 2 and 3 Japanese automakers turn to each other to build strength.

The potential merger could help boost the auto companies production of electric vehicles amid growing changes in the car industry.

Japanese automakers Nissan and Honda have announced plans for a merger that would catapult them to a top position in an industry that's in flux as it transitions away from its reliance on fossil fuels.

"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