Officially confirmed by Honda and Nissan rumors that they continue a merger, the companies wrote a joint press release. Each will continue to operate under its own brand, but with a new joint holding company as the parent. If Nissan-controlled Mitsubishi were also on board, the combined group would be the world’s third-largest automaker by sales volume and have a net worth of up to $50 billion.

“Today marks an important moment as we begin business integration discussions that have the potential to shape our future,” said Nissan CEO Makoto Uchida.

The merger talks are still preliminary, but the companies are moving forward. “We are still in the beginning stage of our review and we have not yet decided on a business combination,” said Honda director Toshihiro Mibe. However, he added that the companies intend to “find a direction for the possibility of business integration by the end of January 2025.” After that, they hope to have a “definite agreement” on the business combination by June 2025. Approval must come from the shareholders of each company and is subject to Nissan implementing a change.

Nissan and Honda in the past announces plans to collaborate on EV components and software development, but the combined company will be even more integrated. According to the press release, the plan includes: standardization of vehicle platforms; integration of research and development teams; and optimization of manufacturing systems and facilities. All mostly designed to cut costs, so it could spell significant layoffs in Japan and elsewhere.

Although both companies sell the same cars as Nissan’s Rogue and the Honda CR-V, some synergy seems possible. Nissan sells large pickup trucks and SUVs in the US that Honda does not offer and also has extensive experience with EVs and plug-in electric vehicles. On the other hand, Honda has relatively strong financials while Nissan is struggling in the market, especially at home.

Of course, Nissan is already in the Renault-Nissan-Misubishi Alliance. Nissan and Renault have a 15 percent voting stake in the other, and all three sold a combined 10.6 million vehicles worldwide in 2017, more than any other light car maker at the time. Alliance is also one of the world’s largest EV makers, with more than 1 million units sold since 2009. If Nissan and Honda merge, it is unclear what will happen to Alliance.