NEW YORK -- Honda Motor Co is in talks to come to the aid of Nissan Motor Co by potentially forming the world's third-largest carmaker in order to better withstand escalating challenges for the global auto industry, reported The Wall Street Journal on Wednesday.

"The two Japanese manufacturers have engaged in merger discussions that appear to have accelerated after Hon Hai Precision Industry Co, the Taiwan-based producer of iPhones known as Foxconn, approached Nissan about acquiring a stake in the company," noted the report. Foxconn has been investing heavily in factories to build electric vehicles.

Nissan's years of simmering issues boiled over in early November, when the company slashed earnings forecasts and said it would have to cull 9,000 jobs globally. The automaker also announced a 20 percent cut to global output as consumers turn their backs on its lackluster lineup, leaving its models to gather dust at dealerships, according to the report.

"Various entities have circled Nissan since then, including several activist investors that have built positions in the stock. Honda's market value is more than four times greater than Nissan's, despite the former making only marginally more cars. This indicates Honda would have the upper hand in talks about a potential deal that the company describes as a merger," it added.