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 U.S.-listed shares popped Monday morning after the Japanese automaker and Nissan announced plans to merge in 2026.

Honda did not respond to Business Insider's request for comment. Honda CEO: Merger is not a Nissan rescue. Honda's shares had initially fallen when news first broke of the merger

Shares of Nissan (NSANY, 7201.T) tumbled on concerns about its deal with Honda (HMC, 7267.T), which isn't expected to close until 2026. One of the concerns is the starting ratio. According to Nikkei analysis,

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.

Honda and Nissan have acknowledged the possibility of a merger, driving an active trading session in Tokyo for the Japanese auto makers.

Honda's prospects look even better. Valued below 6 times earnings today, Honda pays a dividend that yields 5.3% and is projected to grow at a pretty steady rate of more than 3% annually over the next five years. Earnings per share in 2029 could be a full $1 above the $1.50 or so Honda earned in fiscal 2024.

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.