The reported merger talks between Honda and Nissan may cut up the Japanese automobile manufacturing business into two highly effective entities.

Neither Honda nor Nissan have confirmed plans for a merger, which was first reported on December 17 by Japanese newspaper Nikkei. Nonetheless, the pair agreed to collaborate on software program and EVs in August.

A merger would create an automotive powerhouse with gross sales of greater than seven million automobiles yearly, primarily based on final yr’s figures for each firms.

It will see the brand new firm compete for third place on the worldwide automobile gross sales charts, alongside Hyundai Group, which offered 7.3 final yr.