OR Honda and the Nissan agreed to explore a merger between them and to create a joint holding company, they said Monday, which would create the world’s third-largest automaker and mark a huge turnaround in an industry experiencing tremendous upheaval.

The two companies will aim for combined sales of 30 trillion yen ($191 billion) and operating profit of more than 3 trillion yen through the potential merger, they said in a statement.

They aimed to complete talks around June 2025 and then set up a company by August 2026, when the shares of both companies would be delisted.

The merger would create the world’s third-largest auto group after Toyota and Volkswagen, as the major automakers face growing challenges from Tesla and Chinese rivals.

Honda, Japan’s second-largest automaker after Toyota, has a market capitalization of more than $40 billion, while third-ranked Nissan is valued at about $10 billion.

Honda will appoint a majority of the holding company’s board of directors.

The merger of the two historic Japanese brands will mark the biggest shakeup in the global auto industry since Fiat Chrysler Automobiles and PSA merged in 2021 to create Stellantis in a $52 billion deal.

A merger with Mitsubishi Motors would also take the Japanese group’s global sales to more than 8 million cars. The number 3 group is South Korea’s Hyundai and Kia.

Last month, Nissan announced a plan to cut 9,000 jobs and 20% of its global production capacity after falling sales in key markets China and the US. Honda also reported worse-than-expected earnings due to declining sales in China.

Like other foreign automakers, Honda and Nissan have lost ground in the world’s biggest market, China, amid the rise of BYD and other local brands that make electric and hybrid cars with innovative software.

In a separate online press conference on Monday, former Nissan chairman Carlos Ghosn said he did not believe the Honda-Nissan alliance would be successful, saying the two automakers were not complementary.

Ghosn is wanted in Japan because he fled to Lebanon. His arrest in 2018 for financial violations brought Nissan into crisis.

French carmaker Renault, Nissan’s biggest shareholder, is open to a deal in principle and will consider all the implications, sources said.

Taiwan’s Foxconn approached Nissan about an offer, but the Japanese company rejected it, sources told Reuters.

Foxconn decided to end the approach after sending a delegation to meet with Renault in France, Bloomberg News reported on Friday.

Shares in Honda closed up 3.8 percent, Nissan gained 1.6 percent and Mitsubishi Motors gained 5.3 percent on news of details of the planned merger.