Honda and Nissan are in talks to deepen ties, two people said on Wednesday, including a possible merger, the clearest sign yet of how Japan's once seemingly unbeatable auto industry is being reshaped by challenges from Tesla and Chinese rivals.

They're being challenged in China and there is no plan in front of it. So I can tell you that there is panic mode inside me. So we're very in panic mode. And then it then pushes the idea that there's the economy ministry,