Honda and Nissan agreed to consider a merger that would create the world’s third-largest automaker by sales.

The Japanese companies signed a memorandum of understanding on Monday and Mitsubishi Motors Corp. had agreed to take part in discussions about merging their businesses.

What would the merger mean for the auto industry?

Japanese automakers have fallen behind their major rivals in electric vehicles and are now trying to cut costs.

Nissan, Honda and Mitsubishi announced in August that they would share electric vehicle parts such as batteries and autonomous driving research software to better adapt to dramatic changes in the automotive industry.

RELATED: Nissan and Honda announce merger plans that would create the world’s third-largest automaker

A merger could create a group worth over $50 billion. Honda, Nissan and Mitsubishi could join Toyota Motor Corp. and the German Volkswagen AG compete. The Associated Press reported that Toyota has technology partnerships with Japan’s Mazda Motor Corp. and Subaru Corp. entertains.

The Associated Press reported that Nissan has experience building batteries and electric vehicles as well as gas-electric hybrid powertrains that could help Honda develop its own electric vehicles and the next generation of hybrid vehicles.

What does this mean for consumers?

The potential merger between automakers could impact consumers looking for a new car.

Accordingly car edgean online car buying service, Nissan can offer car incentives to buyers, such as cash rebates and affordable leases on remaining 2024 vehicles and new 2025 model cars.

However, Honda’s car prices are not expected to change unless its merger with Nissan significantly changes its business strategy.

If Mitsubishi is included in the merger with Nissan and Honda, the automaker could make significant changes and potentially eliminate less competitive car models from its inventory.

Additionally, Brian Moody, Editor-in-Chief at Autotrader and Kelley Blue Book, tells us FOX business that this deal will impact consumers as they could see the value of smaller, cheaper electric cars from the merger.

“I could even imagine a merger or partnership like this would result in a low-cost sub-brand,” he said. “Because that’s what we’re hearing, that a lot of people, a lot of consumers are saying, ‘You know, new cars are just too expensive. I can’t buy a new car.’”

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