Thousands of workers at Nissan's giant UK car factory are facing uncertainty after the firm entered merger talks with competitor Honda.

Trade union Unite has sought assurances after details emerged of the planned tie-up of the major Japanese firms, together with smaller rival Mitsubishi - bringing together three companies with a combined value of £46billion.

The companies argue that combining their firepower makes sense as they fight back against the likes of Tesla as well as cheaper Chinese manufacturers such as BYD amid the switch to electric vehicles. 

The combined group after a Nissan-Honda merger would have annual sales of nearly £182billion, making it the third biggest car manufacturer in the world, and employ 360,000 people.

It adds to the uncertainty surrounding Nissan's Sunderland plant. Last month, the Japanese giant announced proposals to cut 9,000 jobs, or 7 per cent of its global workforce.

However, the tie-up could be a boost to Sunderland if, as has been speculated, it means a return for Honda to the UK using some of the spare capacity at the plant.

Currently, the factory, Britain's biggest car plant, employs more than 6,000 people and builds the Qashqai, Juke and Leaf models.

Nissan did not say whether or how Sunderland might be affected by the announcement made yesterday.

Unite union's national officer for automotive Steve Bush said: 'Unite will be monitoring the progress of the merger talks closely and seeking assurances from Nissan about any potential impact on its UK operations.'

Sunderland is currently operating at half-capacity, and it has been reported that the possibility of Honda producing vehicles there has been discussed by executives. 

If that were to happen, it would mark a return to UK car manufacturing for the firm, which once employed thousands at its Swindon plant but closed the site in 2021, blaming Brexit.

Professor David Bailey, of Birmingham Business School, said: 'If the Government had an industrial strategy, it would be doing everything to get production at Sunderland of not just Nissan vehicles, but Honda and Mitsubishi too as they have the capacity there.'

Honda hopes to wrap up an agreement by June, with a new parent company for the three floated on the Tokyo Stock Exchange in August.

Although it has been billed as a merger, observers say that Honda is effectively taking over Nissan and Mitsubishi, as it will choose most of the directors for the new owner of the three Japanese car marques, including key executives.

Nissan has been battling falling sales in the US and China and last month issued a profits warning. Bailey said it was in 'the last-chance saloon'.

'Nissan squandered its early lead in electric vehicles and did nothing in hybrids. Now it's in a dire state, this is very much a rescue by Honda,' he said.

Honda chief executive Toshihiro Mibe said that the company's deal with Nissan was 'essential' to help it navigate the changes taking place in the auto industry.