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

Honda and Nissan face a litany of difficult decisions about their competing vehicles and overlapping U.S. manufacturing jobs if they move forward with a merger. Why it matters: A combination of Honda and Nissan — formerly fierce competitors — would create the world's third-largest automaker by vehicle sales behind Toyota and Volkswagen.

Japanese automakers Honda and Nissan have announced plans to work toward a merger that would form the world’s third-largest automaker by sales, as the industry undergoes dramatic changes in its transition away from fossil fuels.