Honda Motor and Nissan Motor are reportedly in the process of merging their companies and are set to start negotiations soon, according to Japanese media.

The news, which was first reported by the Nikkei newspaper on Tuesday, comes as both auto giants struggle to compete with the largest global electric vehicle (EV) makers, including Tesla and Chinese automaker BYD.

The merger plans have not been confirmed by either company. On Tuesday, both companies released identical statements tossing water on the reports.

"As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other's strengths," the companies said in separate statements.

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Honda and Nissan are the second and third-largest auto manufacturers in Japan, respectively, with Toyota leading them both.

The respective market capitalizations of Honda and Nissan are roughly 5.95 trillion yen ($38.8 billion) and 1.17 trillion yen ($7.6 billion).

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In November, Nissan cut its global workforce by 9,000 in a set of massive layoffs, diminishing its global production capacity by 20%.

At the time, the company explained that it was "facing a severe situation" and laid out a plan to achieve "healthy growth." The goals included reducing fixed costs by 300 billion yen (around $1.9 billion) and variable costs by 100 billion yen (roughly $649 million).

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"The company is implementing various measures to lower selling, general, and administrative expenses, decrease the cost of goods sold, rationalize its asset portfolio, and prioritize capital expenditures and investments in research and development," Nissan said in a statement at the time.

Reuters and FOX Business' Elizabeth Pritchett contributed to this report.