Section 2. Motorization and Liberalization of Trade and Capital

Item 4. Alliance with Hino Motors

Following the talk of the merger with Prince Motors, Mitsui Bank brought the idea of a merger with Hino Motors to Toyota Motor Co., Ltd. With Mitsui Bank as the intermediary, negotiations on a cooperative alliance between Toyota and Hino Motors began in January 1965. Then in 1966, Masanobu Matsukata, then president of Hino Motors, made a bold suggestion: "We'll stop making the Contessa compact passenger car, but give us something comparable to do in its place." After that, directors from four companies (Hino Motors, Hino Motor Sales, Ltd., now merged, Toyota Motor Co. Ltd., and Toyota Motor Sales Co., Ltd.) held frequent discussions and eventually agreed on a cooperative alliance.

On October 15, 1966, a joint statement was issued, and on the 19th a memorandum related to the cooperative alliance was signed. The details of the alliance are as follows:

  1. 1.Toyota Motor and Toyota Motor Sales will provide cooperation and assistance for compact cars manufactured and sold by Hino Motors.
  2. 2.New products will be cooperatively planned.
  3. 3.Companies will cooperate in expanding the export market, improving technologies, and streamlining parts and material procurement.

A business partnership committee was established among the four companies and achieved steady progress. On the production side, employees of Hino Motors were sent to Toyota Motor Co., Ltd. for the six months beginning in December 1966 to learn Toyota's manufacturing and management methods. Furthermore, Toyota Motor Co., Ltd. decided to subcontract production of the Publica Van to Hino Motors beginning in March 1967.

On the sales side, Hino Motor Sales streamlined and consolidated its dealership network, with Toyota Motor Sales Co., Ltd. agreeing to absorb the excess dealers and personnel. In this way, progress was made in adjusting the two companies' sales networks. Then in April 1967, the Toyota Briska (GY10), a small, cab-behind-engine-type 1-ton truck, was announced as the first result of the two companies' technical cooperation.

Ten years following the formation of the cooperative alliance, Hino Motors President Masashi Arakawa wrote the following reflection on those days:

Immediately following the formation of the alliance, we sent 1,200 of our employees to Toyota to have them learn the Toyota production method. I remember giving the following pep talk to those selected to go to Toyota:

As soon as you return, you will be assigned to the Publica Line at the Hamura Plant. You have been selected to represent Hino and make the cooperative alliance beneficial. Hino's future is on your shoulders.

We acquired valuable know-how and Hino's corporate culture improved rapidly. Our plants' productivity doubled and the amount of work-in-process was reduced by two-thirds.

Additionally, by learning a new product startup method, we succeeded in improving the initial quality of our new models, and user confidence in Hino vehicles spread throughout Japan.

Hino trucks' market share, which had stood at only 17 percent immediately following the formation of the cooperative alliance, climbed every year thereafter, eventually propelling Hino to the position of the top manufacturer in 1973. 1

In addition to these specific benefits derived from the alliance, Toyota and Hino also strengthened their relationship in terms of capital and personnel beginning in the middle of 1967. For example, in December of that year, Hino Motors built its Hamura Plant No. 2 dedicated to the production of Toyota compact cars in Hamura-machi, Nishitama-gun, Tokyo, further strengthening the alliance between the two companies.

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