These two longtime rival automakers are now considering a merger

Executives with Honda and Nissan say they are exploring a merger following Nissan’s drop in earnings and continued struggles for both carmakers in China, The Wall Street Journal reports.

The two carmakers have grown closer over the past year and previously announced plans to work together on electrification technologies, seeking to share development costs.

Confirming a report with Asian financial publication Nikkei, Honda and Nissan said Wednesday they were in talks over a merger or other future collaboration, although no final decision has been made.

Honda last year sold about 4 million vehicles globally, while Nissan sold about 3.4 million. If their merger moves forward, the combined new company would take third place globally in car sales, behind Toyota and Volkswagen, unless it scales back production to reduce overlaps.

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