Honda, Nissan begin merger talks: Report

Japanese auto giants Honda and Nissan are in talks to set up a holding company, a move that would allow them to share more resources as they compete with the rapidly growing electric vehicle (EV) makers.

The two companies aim at setting up a holding company, with the memorandum of understanding likely to be signed soon, Japanese business daily Nikkei reported, citing sources.

The two companies intend to include "Mitsubishi Motors" —Nissan being the largest shareholder with a 24% stake — under the new holding company to create one of the largest automotive groups in the world.

Their respective stakes in the new entity and details will be decided later.

The move comes as legacy brands struggle with strong competition from Chinese companies, especially EV makers, due to their affordable prices.