Toyota is discussing options on how to possibly combine manufacturing operations in North America of Hino Motors Ltd. and Isuzu Motors Ltd. It is not yet clear whether the discussion will lead to the merging of the two truck manufacturers but according to statement released by Toyota executives in separate interviews, the Japanese automaker would like to create synergies between the two commercial truck producers. In short, combine manufacturing operations of the two truck companies in terms of building big medium and heavy duty trucks and afterwards developed a demand for them.
A senior executive of Toyota said, "I have been saying in internal meetings that it's better to set up and operate truck plants in a joint venture. Neither Hino nor Isuzu has the big enough business size in North America to be able to profitably pursue business opportunities on its own."
At present Hino has two manufacturing sites in North America, one located in Long Beach, California while the other one is in Woodstock, Ontario---combined these two sites produced 10,000 trucks a year. Last June, the company has announced its plan of building a plant in Williamstown, W. Va., which would produce medium and heavy-duty trucks with an annual growth of 2,500 vehicles starting the fourth quarter of this year.
Hino will try to sell 10,000 trucks in North America by 2008 which is more than the 6,200 obtained by the company last year. Meanwhile Isuzu is exporting big inter-city delivery trucks from Japan to North America. However, Toyota thinks that its more efficient to produce these trucks locally in North America especially once sale starts to grow. According to the spokesman of Isuzu that the company is trying to reach sales level of about 50,000 vehicles a year more than the current annual sales pace which are a little less than 30,000.
Isuzu's spokesman said, "We'd like to start producing in Alabama as soon as we reach that level."
Toyota executives believe that the separate manufacturing operations of both Isuzu and Hino in North America are risky and redundant. Toyota owns 50 percent stake in Hino and about 5.9 percent equity stake in Isuzu.
Currently Isuzu and Toyota, the maker of are studying ways on how they would develop and produce small advanced clean diesel engines for both passenger cars and light-duty trucks.
A senior Toyota executive has stated that once the two companies have finished their discussion, the next thing on their agenda would be to "figure out how we could create synergies between Hino and Isuzu."
The executive has added that Toyota has not yet reached that point but pointed out that such discussions would follow after Toyota and Isuzu know they would collaborate with regards to the advanced diesel engine technology.
