Japanese automakers Nissan and Honda have announced plans for a merger that would catapult them to a top position in an industry that's in flux as it transitions away from its reliance on fossil fuels.

Honda's CEO said it was "difficult" to explain why Nissan would make a good business partner. Analysts believe that Honda's ideal partner for a merger would be a more "healthy and financially sound company.

Honda and Nissan have announced official plans to merge.The agreement seeks to consolidate a wide range of resources from platform sharing to supply chain systems in order to bolster the position of Japanese automakers in a rapidly evolving automotive market dominated by electrification and ongoing industry consolidation.