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

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.

Honda, Nissan, and Nissan's partner Mitsubishi are moving forward with a "business integration" to keep the Japanese automakers competitive

Honda Motor Co. and Nissan Motor Co. plan to merge under a holding company with the top executives chosen by Honda in a historical reshuffling of Japan’s auto industry meant to keep the country’s second- and third-largest players competitive amid a global onslaught of new competitors and technologies.

Honda's shares went up by as much 17% when local markets opened on Tuesday.

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.

Japan's Honda and Nissan said Monday they had embarked on formal merger talks that would create the third-largest car manufacturer globally with sales of as much as $191.4 billion and more than $19 billion profit.

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.

Nissan will be the victim of cost-cutting “carnage” if it combines forces with Japanese peer Honda, former Nissan CEO Carlos Ghosn told CNBC on Tuesday.