Japanese carmakers Honda and Nissan are reportedly considering a merger — a sign that major global manufacturers are joining forces to compete against their mighty Chinese competitors as the auto world goes electric.

A Honda Motor Co. and Nissan Motor Co. combination could give the two struggling Japanese brands the scale to take on China’s BYD Co., sales figures released Wednesday show.

Honda and Nissan have officially confirmed the rumors that they're pursuing a merger. Both would still operate under their brands but with a new joint holding company as parent. If Nissan-controlled Mitsubishi also came on board,