April 12, 2018 / 7:57 AM / 4 months ago

UPDATE 2-Toyota's Hino, VW's truck unit tie up to reduce R&D costs

* Will mull cooperation in hybrid engines, self-driving

* Not considering cross-shareholding currently - Hino

* Partnership could bring R&D, procurement economies of scale (Adds background and Hino comment on cross-shareholding)

By Naomi Tajitsu

TOKYO, April 12 (Reuters) - The truck units of Toyota Motor and Volkswagen AG are forming an alliance to bolster their market positions as commercial vehicle makers face growing costs to develop lower-emission vehicles and automated driving capabilities.

The strategic tie-up of Toyota subsidiary Hino Motors and Volkswagen Truck & Bus GmbH is the latest in the global vehicle industry, where automakers seek to jointly tackle the high costs of developing self-driving vehicles and new transportation services like ride sharing.

The two truck makers said on Thursday they will consider cooperating in areas such as diesel and gasoline-electric hybrid engines, connectivity and self-driving technologies, adding their combined output could offer economies of scale in research and development (R&D) as well as procurement.

“We can join forces and spend R&D money only once instead of twice or three times,” Volkswagen Truck & Bus GmbH Chief Executive Officer Andreas Renschler told reporters at an event in Tokyo to announce the agreement.

“We see potential to save on our budgets and also to combine our resources to be faster at bringing products to market than we would be alone.”

The companies were not considering the possibility of cross- shareholding at the moment, a Hino spokesman said.

Both Volkswagen Truck & Bus, the world’s third-largest commercial vehicle maker, and Hino said the partnership would not change their respective relationships with their parent groups which are fierce competitors in passenger cars.

The tie-up comes after Volkswagen bought a 16.6 percent stake in Navistar International Corp in 2016 with an eye to buying all of the U.S. truckmaker. The two partners plan to launch an electric medium-duty truck in North America by 2019.

Volkswagen AG aims to list its trucks and buses operations in the first quarter of next year, according to two people with knowledge of the matter, as the German automaker considers a broader structural overhaul to boost efficiency.

Posting sales of around 205,000 units last year, Volkswagen Truck & Bus supplies commercial vehicles mainly in Europe and South America under its MAN, Scania and Volkswagen Caminhões e Ônibus brands. It has been growing its presence in Asia and holds a stake in Chinese truck maker Sinotruk.

Its chief competitors are Daimler and Volvo trucks, with which it competes mainly in the European market.

Hino sold around 170,000 vehicles in 2017, roughly 70 percent of which were sold in Japan and the rest of Asia, where it dominates the large commercial vehicle market. It has been growing operations in Africa and North America.

Reporting by Naomi Tajitsu; Addional reporting by Minami Funakoshi; Editing by Chang-Ran Kim and Muralikumar Anantharaman

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