TOKYO Japan's Mitsubishi Motors is set to join an alliance between Honda Motor and Nissan Motor, creating a tie-up between automakers with combined sales of more than eight million vehicles, the Nikkei newspaper said on Sunday.

Mitsubishi Motors, which is 34% owned by Nissan, will work with Honda and Nissan to finalise the details of their strategic partnership, Nikkei said, adding the three firms intend to standardise in-vehicle software that controls cars.

Mitsubishi Motors declined to comment on the report, while a Nissan spokesperson would only say the report was not based on something either of the companies had announced. Spokespeople for Honda did not respond to a request for comment.

The push comes as Nissan, Japan's third biggest automaker, has been steadily losing market share in its two largest markets, the US and China, which together accounted for half of its global sales in the year to March.

On Thursday, the company slashed its annual outlook after heavy discounting in the US almost completely wiped out its first-quarter profit.

Nissan and Honda said in March they were considering a strategic partnership to collaborate on producing electric vehicle components and artificial intelligence in automotive software platforms.

Mitsubishi Motors is already part of a long-standing alliance with Nissan and France's Renault that the three automakers last year agreed to restructure, aiming for a downsized but more pragmatic and agile partnership.

Separate collaboration between Nissan, Honda and Mitsubishi Motors could help Japan's automakers cut costs and beef up to battle tough competition in EVs, dominated by companies like China's BYD and Tesla.

In China, the world's largest auto market, Japanese brands previously were strong but are now up against domestic automakers that have rapidly increased production and won over consumers with low-priced vehicles loaded with software.

  - Reuters