Honda Motor and Nissan Motor, Japan’s second- and third-largest automakers, are discussing ways to deepen their ties, including the possibility of a merger that could fundamentally restructure Japan’s car industry.

The merger talks between the two storied Japanese giants highlight the intense upheaval within the world’s auto industry, as carmakers grapple with expensive technological shifts, political instability and the rise of fast-growing Chinese rivals.

Though discussions are still at an early stage, the thinking at Nissan and Honda is that combining forces could provide the companies with the resources and scale necessary to navigate those immense pressures.

Last year, Honda sold 3.98 million vehicles and Nissan 3.37 million. Their combination could make them the world’s third-largest automaker group, behind their Japanese rival Toyota Group, which sold 11.23 million vehicles last year, and Volkswagen Group of Germany, which sold 9.23 million.

Honda and Nissan began collaborating this year on the development of electric vehicles. Over several months, their discussions have expanded to include the potential creation of a new company under which both automakers would operate, according to two people familiar with the matter who were not authorized to speak publicly.