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.

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.

Honda's acquisition of Nissan could strengthen the two struggling brands to better compete with China's BYD Co. in the global auto market. Honda's planned acquisition of Nissan would combine their more than 6 million global sales in 2024,

Analysts questioned the timing of the Honda-Nissan potential deal amid intense competition from Chinese rivals, reported the news agency Reuters.

Two major Japanese automakers are heading for a historic merger, as Honda Motor Co. and Nissan Motor Co. signed a basic agreement to start full-fledged talks on integrating their businesses Monday. With the rise of electric vehicles manufactured by U.