Hino Motors
Corporate History & Strategy

In 1936, the Ministry of Commerce and Industry enacted the Automobile Manufacturing Business Act, establishing a policy of granting subsidies to companies with annual manufacturing capacity of 3,000 units or more. Tokyo Gas Electric Industry could not independently meet this production scale requirement and merged in 1937 with Automobile Industries Co. (now Isuzu Motors), which also had factories in the Tokyo metropolitan area, to form Tokyo Automobile Industries. By integrating the production capacities of both companies through the merger, the conditions for the Ministry of Commerce and Industry's subsidy policy were met. It was an era when securing scale through corporate mergers was required within the framework of national automobile industry development policy.

In September 1938, Tokyo Automobile Industries secured a 200,000-tsubo factory site in Hino City, Tokyo, for the mass production of tanks and armored vehicles, and decided to establish the Hino Manufacturing Works. The geographic proximity to the Army's Sagami Arsenal was considered in site selection. The Hino Manufacturing Works began operations in 1941, functioning as a production base for special vehicles for the Army. Workforce expansion proceeded, and by the end of the war, approximately 7,000 people, including student mobilization workers, were employed at the facility.

In operating the Hino Manufacturing Works, the coexistence of subsidy systems from two government bodies—the Ministry of Commerce and Industry and the Army—became problematic. While Tokyo Automobile Industries received subsidies under the Ministry of Commerce and Industry's Automobile Manufacturing Business Act, the Hino Manufacturing Works was a mass-production base for Army vehicles and would have been better served under the Military Vehicle Protection Act administered by the Army. However, a single legal entity receiving subsidies from both systems simultaneously created institutional contradictions, leading to the decision to separate the Hino Manufacturing Works from Tokyo Automobile Industries as an independent entity.

In April 1942, Hino Heavy Industries was established by spinning off the Hino Manufacturing Works from Tokyo Automobile Industries. At the time of establishment, it was a 100% subsidiary of Tokyo Automobile Industries, but the parent company soon indicated its intention to sell its shares, and the Wartime Finance Corporation, a government agency, acquired 80% of the shares. As a result, Hino Heavy Industries was operated not as a private enterprise but as a government-affiliated company in terms of capital. This government-led capital structure was maintained until the company's stock listing in 1949.

With the end of the war in August 1945, tank manufacturing—the core business of Hino Heavy Industries—came to a complete halt. Having lost the foundation for its existence, Hino Heavy Industries decided to dissolve the company in September of the same year and issued termination notices to all approximately 7,000 employees. Of these, 1,500 had been with the company since the predecessor Tokyo Gas Electric Industry era, and job placement assistance and severance pay were provided. Hino Heavy Industries, which had been established as a military factory, was forced to completely cease operations just over three years after its founding.

One month after the company's dissolution, in October 1945, the company was reestablished as Hino Industries with a workforce of 300 employees who wished to remain, aiming to transition to peaceful industries. In March 1946, the company name was changed to Hino Sangyo, and in August of the same year, the large trailer truck 'T10/20' was developed. By converting the diesel engine and vehicle body production technology accumulated through tank manufacturing to truck production, the direction of the business transformation from a military manufacturer to a commercial vehicle manufacturer was established.

Starting in 2003, Hino Motors began engaging in fraudulent practices in engine certification applications for commercial vehicles. Certification testing is a procedure to prove to national agencies that vehicles meet emissions and fuel efficiency standards, and the application data was intentionally manipulated. The fraud continued internally for approximately two decades but was concealed without being exposed externally for an extended period. In 2020, fraudulent engine certification applications were identified in North America, bringing the issue to light for the first time.

Following the discovery in North America, engine certification fraud was also confirmed in the domestic market in March 2022. The fraud involved falsification of emissions and fuel efficiency data and affected a wide range of commercial vehicle models manufactured by Hino Motors. As the scope of the fraud expanded, trust in Hino Motors' quality control system was severely shaken, with effects including administrative sanctions from the Ministry of Land, Infrastructure, Transport and Tourism and loss of credibility among business partners.

Following confirmation of the fraud, Hino Motors decided on global shipment suspensions and recalls of affected models. From FY2020 through FY2022, 'certification losses' were recorded as extraordinary losses, resulting in three consecutive years of net losses. The cumulative certification losses reached a massive amount, damaging Hino Motors' financial foundation. The decline in revenue from shipment suspensions combined with rising costs from recall responses and damages, pushing the company into a situation where continuation of business operations itself became difficult.

Toyota Motor, the parent company, decided to cease management support for Hino Motors following the revelation of certification fraud. Although Hino Motors had been positioned to carry the Toyota Group's commercial vehicle business, the certification fraud destroyed the foundation of trust. With the parent company's support cut off, Hino Motors was placed in a situation where standalone survival was difficult, transitioning into a phase of exploring management integration or merger with other commercial vehicle manufacturers.