The Detroit Three are facing an auto industry increasingly affected by the rise of China as demonstrated by the planned merger of Honda and Nissan.

The proposed deal aims to unify operations under a joint holding company, led by Honda, while maintaining the distinct identities of each brand, according to Honda's president, Toshihiro Mibe. If finalized, the merger would position the combined entity to better compete with market leaders Toyota and Volkswagen.

Honda did not respond to Business Insider's request for comment. Honda CEO: Merger is not a Nissan rescue. Honda's shares had initially fallen when news first broke of the merger

Nissan and Honda have announced plans to merge by 2026 in a seismic shift for the Japanese auto industry. The two carmakers signed a memorandum of understanding that allows them to continue discussions about integration via a joint holding company,

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.

Moody's gave a positive review of the potential merger of Honda and Nissan, but former Nissan CEO Carlos Ghosn warned his old employer would face "carnage" if the combination went through.

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.

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.

The potential merger could help boost the auto companies production of electric vehicles amid growing changes in the car industry.

Honda, Nissan, and Mitsubishi are joining forces to operate together under a single holding company, in a bid to stave off fierce competition around the world.