Hino Motors Ltd. and Isuzu Motors Ltd. said Friday they will integrate their unprofitable bus businesses into an equally owned joint venture to be established next year. Hino Motors President Hiroshi Yuasa and Isuzu President Takeshi Inoh told a news conference in Tokyo that joint production will begin by 2002. The two automakers hope the tieup will allow them to weather the prolonged slump in demand from operators of chartered buses and providers of scheduled bus services. The two firms will also join hands in procurement and research and development to improve efficiency, but maintain separate sales channels and brand names. It will be the first time two vehicle makers have crossed the lines of capital affiliation to integrate operations. Hino is affiliated with Toyota Motor Corp., while Isuzu is roughly half-owned by General Motors Corp. The collaboration follows an agreement by the two companies in October to jointly develop gear boxes for heavy-duty trucks. "The structural problems of the shrinking market, over-capacity in production and excessively severe competition have brought on a deterioration in revenues from our bus segment," Yuasa said. "The current situation is even threatening the continuation of this business for both of us. "We have agreed to jointly carry out structural reforms in the bus business. This cooperation is a fundamental agreement that includes the reorganization of our bus business." "Automakers compete for customers. But there is cooperation for customers," Inoh said. "Although we compete in the bus business, we will cooperate in areas in which we both see merits." Demand for buses has dropped sharply. Total demand for small buses was 15,100 units in fiscal 1988, but that figure declined to 7,700 units in fiscal 1998, according to the firms. Cooperation may enable the two to expand their truck businesses, which have been suffering from slack demand, denting the automakers' revenues. Yuasa did not deny the possibility, calling the planned bus agreement a "trial" for further cooperation in the truck business.
