Shareholders in each carmaker would own 50% of its total operations, the companies said in a joint statement Thursday. A binding agreement can be concluded within weeks, the statement states.
The merger comes amid a global sales slowdown. At the same time, automakers are rushing to invest in the electrical and hybrid technologies needed to meet stringent new emission targets in China and Europe. Autonomous vehicles of the future also pose a threat to traditional industrial business models.
The huge amount of capital needed to meet these new challenges has forced some automakers to find partners and make others acquisition targets.
"We look at the combination of these two companies as reasonably given global competition, high capital intensity and disruption in the industry from electrified drives as well as autonomous technologies," Richard Hilgert, senior stock analyst at Morningstar, said in a research note on Wednesday.