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Toyota (TM) & Daimler to Combine Truck Operations in Japan

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Toyota Motor Corporation (TM - Free Report) and Daimler Truck Holding AG have entered a non-binding agreement to merge their Japanese truck business.

The companies announced that under the memorandum of understanding (MOU), Daimler-owned Mitsubishi Fuso Truck and Bus Corp. businesses and Toyota subsidiary Hino Motors Ltd. would be combined under a holding company.

Shares of the new company are expected to get listed on the Prime Market of the Tokyo Stock Exchange.

Martin Daum, CEO Daimler Truck, said that the merger offers the companies an opportunity to achieve economies of scale they require to carry out technological advancements. The sales organization will operate independently of each other globally, but the companies will conduct joint development, procurement and production, Daum added.

According to a statement, both Toyota and Daimler will make equal investments in the company and collaborate on the development of hydrogen and other technologies in the areas of connectivity and autonomous driving. Daum referred to hydrogen as the future of automotive mobility as it offers the solution to achieve carbon neutrality.

The companies expect to sign a definitive agreement during the first quarter of 2024 and close the transaction by the end of 2024.

Last year, a committee found that Hino, a Toyota subsidiary, had falsified emissions data going back to 2003. After the scandal came to light, four Hino executives resigned last October and president Satoshi Ogiso retained his post but returned half his monthly compensation for six months.

Toyota’s electrification push is a major tailwind. The Japanese auto giant aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030. The company plans to invest 4 trillion yen ($35 billion) for a line-up of 30 BEVs by 2030. It aims to expand global sales of BEVs to 3.5 million units a year by 2030. The company is working on hydrogen fuel stations in collaboration with various partners.

Zacks Rank & Key Picks

TM currently carries a Zacks Rank #3 (Hold).

Some top-ranked players in the auto space are Ford Motor (F - Free Report) , General Motors (GM - Free Report) and Wabash National (WNC - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ford is one of the leading automakers in the world. The Zacks Consensus Estimate for F’s 2023 sales implies year-over-year growth of 7.6%.

General Motors is one of the world’s largest automakers. The Zacks Consensus Estimate for GM’s 2023 sales indicates year-over-year growth of 4.5%.

Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings indicates year-over-year growth of 12% and 90.7%, respectively.

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