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Toyota and Germany’s Daimler Truck have finalised an estimated $6.4bn merger of their heavy goods vehicle businesses in Japan in response to growing competition from Chinese rivals racing ahead on electrification and autonomous driving technology.
The deal brings together Toyota unit Hino Motors with Daimler Truck subsidiary Mitsubishi Fuso Truck and Bus. It creates a Japanese commercial vehicle powerhouse that sells more than 200,000 units annually and has greater scale to invest in hydrogen trucks and buses.
The merger comes as the global commercial vehicle industry undergoes a rapid transition towards electric and hydrogen-powered drivetrains and autonomous driving, with China taking the lead.
Characterised by long driving ranges, heavy loads and short refuelling times, trucking is viewed as a crucial sector for Toyota to create a large market for its hydrogen fuel cells, as cleaner passenger car transport has become dominated by battery-powered electric vehicles.
Robin Zeng, the billionaire behind China’s battery champion CATL, forecast last month that half of new trucks sold in China in three years’ time would be electric, underlining the upheaval coming for the heavy goods vehicle market.
“By bringing together two strong partners, we will create an even more powerful company and advance decarbonisation in transportation,” said Daimler Truck chief executive Karin Rådström. “Scale is the key to winning in the technological transformation of our industry.”
The combined entity — led by Mitsubishi Fuso CEO Karl Deppen — divides Japan’s commercial vehicle manufacturing into two main camps, with Isuzu Motors dominating the other.
Toyota and Daimler Truck, the world’s largest truck manufacturer, will hold equal stakes of 25 per cent in the holding company, but the Japanese vehicle maker’s voting rights will be lower at 19.9 per cent. Jefferies analysts estimate the equity value of the combined entity to be €5.6bn at 11 times earnings before interest and taxes.
After a preliminary merger agreement was reached in May 2023, the deal was postponed in February 2024 following an engine data falsification scandal at Hino.
At the start of this year, Hino agreed a $1.2bn settlement with the US authorities, leading the truck unit to a record net loss but helping to pave the way for the merger.
Since the deal was first announced, both companies have lost ground in the truck market and US tariffs on imports have added to the challenges faced by commercial vehicle manufacturers.
The sealing of the deal comes at a time of big upheaval for Toyota, as the world’s largest carmaker prepares to take part in the $33bn take-private of Toyota Industries, one of its key suppliers.
Alongside the deal, Hino will transfer ownership of the Hamura plant to Toyota Motor for ¥150bn ($1bn). The world’s largest carmaker has produced its Hilux and Land Cruiser 250 vehicles there.
The merger also adds to the growing collaboration between Japan and Germany on hydrogen. The two companies aim to list the holding company in Japan and start operations by April next year.
Additional reporting by Kana Inagaki in London
