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Volkswagen Truck teams with Toyota's Hino despite parents' rivalry

Japanese company will give German group access to Asia sales network

Hino Motors President Yoshio Shimo, left, and Volkswagen Truck & Bus CEO Andreas Renschler shake hands during a news conference in Tokyo on April 12.   © Reuters

TOKYO -- Volkswagen's commercial vehicle unit and Toyota Motor affiliated truck maker Hino Motors announced a tie-up in the commercial vehicle business Thursday, in a move that shows how major changes in the business environment such as autonomous vehicles and the rise of China are forcing long-time rivals to partner together.

Volkswagen Truck & Bus and Hino Motors said they will cooperate in emerging fields including electric vehicles, autonomous driving and the Internet of Things, as well as in the development of clean technology to help alleviate air pollution in emerging market cities.

The partners are also expected to complement each other's sales networks and manufacturing capabilities worldwide. Volkswagen Truck & Bus is keen to tap into Hino's strong presence across Asia, since its own commercial vehicle segment is heavily geared toward Europe and South America.

"The automobile industry is facing a massive once-in-a-century transformation," said Yoshio Shimo, president and CEO of Hino Motors, pointing to such changes as the rapid expansion of e-commerce, a growing shortage of truck drivers, and the need to develop autonomous driving technology to deal with such shortages. "We cannot meet our customers' demands by just providing the same value as we did in the past. Hino Motors and Volkswagen Truck & Bus share this sense of urgency."

Andreas Renschler, chief executive of Volkswagen Truck & Bus, said the tie-up will save both companies costs in product development and distribution. "Both companies are determined to face the challenges in the transportation industry with joint forces," he said.

Toyota Motor, the German automaker's archrival, owns 50.1% of Hino shares.

"We have full support of the VW Group, also full support of Toyota for this strategic partnership," Renschler said at a press conference in Tokyo.

The partnership is expected to help the two truck makers catch up with Daimler, the leader in the commercial vehicles field, in emerging technologies. Daimler's Mitsubishi Fuso Truck & Bus unit already started mass production of small electric trucks last year, in a world first. Daimler also has a plan to mass produce large electric trucks in 2020 or later, to take the lead in the field.

The Japanese-German partners hope the tie-up will also help them deal with competition from Chinese companies. According to British research company LMC Automotive, five of the 10 top players in sales volume in the medium-to-large truck category last year were Chinese, including the No. 2 and No. 3.

Hino Motors hopes the partnership will help the company leapfrog its rivals in the development of autonomous driving systems and electric powertrains. Hino builds hybrid-engine trucks, but has yet to commercialize electric truck technology. In autonomous driving technology, the company just started a pilot project last month to test whether autonomous trucks can drive in a line without drivers.

Experts say that different powertrain designs are required for commercial vehicles than for passenger vehicles in developing electric trucks, because they are much heavier.

For Toyota, the partnership might complicate its business strategy.

Toyota took control of Hino in 2001, but it also has another truck affiliate, Isuzu Motors, in which the carmaker has a 5.9% stake. Experts argue that the VW-Hino alliance could move ahead of Toyota in the development of autonomous driving technology, saying that such technology applies better to commercial vehicles operating along fixed routes than to regular passenger cars.

Nikkei staff writers Mitsuru Obe and Akihide Anzai contributed to this article.

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