(Reuters) -Japanese auto giants Honda Motor ( HMC ) and Nissan Motor ( NSANF ) will enter negotiations for a merger and join their resources to better compete against bigger global electric vehicle makers, the Nikkei newspaper reported on Tuesday.

The two companies are looking to operate under a single holding company and are expected to soon sign a memorandum of understanding for the new merged entity, the report added.

Honda ( HMC ) and Nissan ( NSANF ) were not immediately available for Reuters requests for comment.

The move comes as tough competition from Chinese EV makers add pressure on legacy brands struggling to make enough profit from their electrified ventures.

Honda ( HMC ) and Nissan ( NSANF ) also look to eventually bring in Mitsubishi Motors, in which Nissan ( NSANF ) is the top shareholder with a 24% stake, under the holding company, to create one of the world's largest auto groups, Nikkei reported.

The stakes of the two companies in the new entity, along with other details are to be decided later, the report said.

(Reporting by Shivangi Lahiri in Bengaluru; Editing by Shreya Biswas and Arun Koyyur)