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.

The Renault Group holds almost 36% of Nissan, but its role in the merger remains unclear. The French group said it’s considering “all options” as talks between the Japanese brands intensify. Former Nissan and Renault boss Carlos Ghosn suggests Renault might sell its shares to Honda.

Once they find a common direction, Honda and Nissan will draw up a definitive agreement to merge, including a plan to transfer shares, by June 2025. If that goes through, they will seek to get plans approved by April 2026, with the merger happening later that year.

With a 36-percent stake in Nissan, Renault appears open to a merger with Honda. But does it mean it wants to stay in the Alliance?

Here's a quick look at what a combined Honda and Nissan would mean for the companies, and for the auto industry.

Honda will not be making it easy for Nissan, however. This is not a case of Honda paying the bills to get Nissan back up to speed, as the latter will still be responsible for digg