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.

Honda and Nissan plan to merge as the two Japanese firms seek to fight back against competition from the Chinese car industry. Joining forces would create one of the world's biggest car producers alongside Toyota,

TOKYO >> Honda and Nissan are in talks to merge by 2026, they said on Monday, a historic pivot for Japan’s auto industry that underlines the threat Chinese EV makers now pose to the world’s long-dominant legacy car makers.

Analysts questioned the timing of the Honda-Nissan potential deal amid intense competition from Chinese rivals, reported the news agency Reuters.

Honda’s potential acquisition of Nissan could help the two Japanese brands improve their competitive stance against China’s BYD in the global car market. Struggling individually, Honda and Nissan sold 3.