Japan's Mitsubishi Motors is set to join an alliance between Honda Motor and Nissan Motor, according to the Nikkei newspaper.

The move will create a tie-up between automakers with combined sales of more than 8 million vehicles, said a Nikkei report on Sunday.

Mitsubishi Motors, which is 34 percent owned by Nissan, will work with Honda and Nissan to finalize the details of their strategic partnership, Nikkei said.

One of the goals for the three firms is to standardize in-vehicle software that controls cars.

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

Earlier this year, Nissan and Honda said 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 the NEV sector, dominated by companies like China's BYD and Tesla.

In China, the world's largest auto market, Japanese brands were strong but are now up against domestic automakers that have won over tech-savvy consumers with their cutting-edge vehicles.