FAR EAST: JAPAN REPORT
The announced reorganization of several commercial vehicles companies came suddenly and was one that few in the industry expected.
On May 30, Toyota Motor Corporation and Daimler Trucks of Germany announced a business merger between Toyota-owned Hino Motors and Daimler-owned Mitsubishi Fuso Truck and Bus Corporation. The merger is expected to be completed by the end of 2024.
The four companies have reached a basic agreement that calls for Toyota and Daimler to establish a holding company by the end of 2024 with the aim of going public. Hino Motors and Mitsubishi Fuso will become part of the holding company. Toyota and Daimler will hold the same percentage of shares in the holding company, and Hino Motors will cease to be a consolidated subsidiary of Toyota after the merger.
The Hino and Fuso brands will remain after the merger, and the long-running structure of the so-called “big four” Japanese truck makers will be consolidated into two camps: Hino Motors and Mitsubishi Fuso, and Isuzu Motors and UD Trucks.
Hino Motors’ engine cheating scandal led to this industry reorganization.
While the problem of Hino Motors’ falsification of emission data came to light in March 2022, it was discovered that the fraud had been going on since the early 2000s.
The suspension of domestic shipments of trucks and buses and the damage to the brand caused Hino Motors to post a consolidated net loss of 117.6 billion yen for the fiscal year ending March 2023, its largest ever, and its third consecutive year of net losses.
With Hino Motors still in the investigation stage to determine whether there were any irregularities in the U.S. and other countries as well as in Japan, the question of how Toyota would support Hino Motors, which was in dire straits, had long been an issue.
Under the merger plan, a new holding company would be established and stock of the holding company will be listed on a stock exchange in Japan.
Source: Diamond Online
PSR Analysis: Hino has been in a tight spot since the engine fraud was discovered in March 2022.
The company has lost the trust of its customers, and the MLIT (Ministry of Land, Infrastructure, Transport, and Tourism) has revoked the approval required for engine mass production. The company has posted extraordinary losses, including recall costs, and has been in the red for three consecutive fiscal years.
While having to deal with the fraud issue, the company also has had to work on CASE technology in the truck sector. However, the company has been excluded from CJPT (Commercial Japan Partnership Technologies), a joint venture by Toyota and Isuzu to develop CASE technology for small- and medium-sized trucks. In addition, in April, the company dissolved its technology development partnership with Traton SE, a member of the VW Group.
The development of FCVs and other next-generation technologies is a long-held dream of commercial vehicle manufacturers. A single company alone cannot bear the cost of development, and in that sense, this business integration is an important milestone for Hino that will determine its future.
There is a limit to how much Toyota alone can support Hino. On the other hand, Toyota is ahead of Daimler in hydrogen technology, and sharing this knowledge with Daimler will accelerate development. This merger is a milestone in brand survival and technological development and is a major crossroad for Japanese truck makers. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
