Toyota and Daimler Truck Units Edge Closer to Historic Merger, Aiming for 2026 Listing

The automotive industry is abuzz with news of an impending merger between Toyota Motor’s truck unit, Hino Motors, and Daimler Truck’s Mitsubishi Fuso Truck and Bus Corporation. After years of negotiations and delays, the two companies are now on the brink of finalizing a deal to create a new holding company that will list on the Tokyo Stock Exchange’s Prime market by April 2026. This strategic alliance, driven by the need to compete in a rapidly evolving global market, could redefine the commercial vehicle sector.

The Merger’s Progress: From Delays to Deadline

The partnership traces back to May 2023, when Toyota and Daimler Truck first agreed to merge their truck operations to tackle rising costs, decarbonization targets, and competition from Chinese manufacturers. However, progress stalled in February 2024 due to Hino’s involvement in a U.S. emissions scandal, which revealed falsified engine data dating back to 2003. The scandal led to a $1.2 billion settlement with U.S. authorities in late 2024—a critical step to clear regulatory hurdles.

By April 2025, the companies are reportedly nearing final terms, with Japan’s Fair Trade Commission antitrust review nearing completion. The merger agreement is expected to be signed as early as May 2025, with the holding company targeting a Tokyo listing by April 2026.

Why the Merger Matters: Strategy Over Survival

The merger isn’t merely about avoiding losses but about positioning for dominance in the $500 billion global commercial vehicle market, which is undergoing seismic shifts. Key drivers include:

1. Electrification and Autonomy: Both companies are racing to develop carbon-neutral technologies, such as hydrogen fuel cells and electric trucks, to meet regulatory targets.
2. Chinese Competition: Chinese manufacturers like Sinotruck and Dongfeng are gaining ground with cost-efficient, tech-savvy offerings.
3. U.S. Trade Tariffs: By consolidating operations, the merged entity can better navigate supply chain complexities and trade barriers.
4. Scale for Innovation: A combined entity would pool resources to invest in R&D, procurement, and global expansion, particularly in Southeast Asia, a key growth region.

Structural Details: A Balanced Play for Control

The merger terms emphasize equity and governance. Toyota holds 50.1% of Hino, while Daimler owns 89.3% of Mitsubishi Fuso. The new holding company will adopt an equal ownership model, though Toyota’s voting power will be capped at below 20% to prevent dominance. This structure aims to ensure decision-making remains collaborative, avoiding conflicts between the two automotive giants.

The holding company will fully integrate both brands’ operations, streamlining production, procurement, and R&D. Notably, the entity will prioritize low-complexity vehicles tailored for urban and long-haul logistics—a segment where both companies have strong reputations.

Financial Implications: Risks and Rewards

The merger’s success hinges on several factors. Positively, the $1.2 billion U.S. settlement has removed a major liability for Hino, stabilizing its financial footing. Meanwhile, Daimler’s focus on its truck division (spun off from its car business in 2021) aligns with the trend toward specialized automotive entities.

However, risks remain:
- Market Sentiment: Investors may question the timing of the listing amid macroeconomic uncertainty.
- Regulatory Scrutiny: While antitrust approval is nearing, any delays could push back the 2026 target.
- Technological Bet: The pivot to electrification and autonomy requires sustained investment, which could strain margins.

Conclusion: A Bold Move with Long-Term Potential

The Toyota-Daimler merger reflects a strategic response to industry pressures, positioning the combined entity as a formidable player in the global commercial vehicle market. With a $500 billion sector poised for growth—driven by decarbonization mandates and urbanization—the merged company’s focus on innovation and cost efficiency is well-timed.

While risks such as regulatory hurdles and market volatility persist, the 2026 Tokyo listing offers a clear milestone. If successful, the holding company could command a market cap exceeding $20 billion, based on current valuations of Hino and Mitsubishi Fuso. Investors should watch closely for final terms, regulatory approvals, and the companies’ ability to execute their tech roadmap. This merger isn’t just about survival—it’s about shaping the future of commercial transportation.