Toyota Motor plans to increase its return on equity to compete globally, reports said Wednesday. Earlier this week, Honda Motor and Nissan confirmed they are in talks about a possible merger at time of auto industry upheaval.

The proposed deal aims to unify operations under a joint holding company, led by Honda, while maintaining the distinct identities of each brand, according to Honda's president, Toshihiro Mibe. If finalized, the merger would position the combined entity to better compete with market leaders Toyota and Volkswagen.

Together, Honda and Nissan would also pose more of a threat to Toyota Motor Corp., which is the world’s biggest automaker followed by Volkswagen AG.