Toyota Motor Corp. said Wednesday it will raise its stake in truck manufacturer Hino Motors Ltd. to 50.1 percent from the current 36.6 percent in late August with the purchase of new Hino shares.
The top truck maker will increase its capital through a third-party allocation of shares to Toyota, becoming a subsidiary of Japan's top automaker.
Toyota will purchase 122.3 million new Hino shares for 66.29 billion yen, or 542 yen per share against the face value of 50 yen.
Toyota will also send its Vice President Tadaaki Jagawa to become Hino's new president. President Hiroshi Yuasa will become the truck and bus maker's senior adviser. The new management will officially be decided at Hino's stockholders' meeting scheduled for June.
Yuasa said the domestic truck market has seen a major decline in sales volume since 1990, and exports to Southeast Asian countries, where Japanese truck makers dominate the market, has also plunged over the years.
The Hino group incurred pretax losses of 42.65 billion yen and 25.69 billion yen in fiscal 1998 and 1999.
"Under such a harsh environment, the company has undertaken a major structural reform and recovered from the red it suffered in fiscal 1998 and 1999," said Yuasa, who led Hino for four years.
With its capital base revamped, Hino will reinforce environment-related technologies and operations overseas, especially in Southeast Asian countries, Yuasa said.
Fujio Cho, president of Toyota, said that the latest deal will enable the Toyota group to better compete with its rivals in the global market. "We will strengthen our partnership within the group and be more competitive," he said. Hino will be Toyota's second domestic subsidiary automaker after Daihatsu Motor Co., which mainly produces minivehicles with engine displacements of 660cc or less.