Daimler Truck Holding AG (DTG) Earnings Call Transcript & Summary

[Interpreted] Ladies and gentlemen, thank you very much for joining today despite the short notice. I have the pleasure of serving as the MC today. My name is Nagata of Toyota Motor Corporation. We would like to start the joint press conference by 4 companies, Daimler Truck, Mitsubishi Fuso Truck and Bus [ Corporation ] and Toyota Motor Corporation. Those of you who are expected to take stage, please do so at this juncture. Now ladies and gentlemen, let me introduce to you those who are on the stage, CEO of Daimler Truck, Martin Daum; President and CEO of Mitsubishi Fuso Truck and Bus Corporation, Karl Deppen; President and CEO of Toyota Motor Corporation, Koji Sato; and President of Hino Motors, Satoshi Ogiso. First of all, President and CEO of Toyota Motor Corporation, Sato, is going to say a few words.

[Interpreted] I'm Koji Sato, Toyota. Thank you very much for joining us today despite your busy schedule and the short notice. Today, Daimler Truck; Mitsubishi Fuso Truck and Bus; Hino; and Toyota; these 4 companies agreed to collaborate towards strengthening their commercial vehicle businesses. Mitsubishi Fuso and Hino will merge on an equal footing to strengthen their global competitiveness. Furthermore, our 4 companies will pursue new possibilities in the commercial vehicle business by leveraging Daimler Truck and Toyota's CASE technologies. Today, I would like to talk about the aims of this collaboration and our thoughts behind it. Behind this collaboration is our 4 companies' strong desire to create the huge commercial vehicles together. Commercial vehicles, which support our daily lives through the movement of people and goods are an important form of mobility that can truly be called part of our social infrastructure. Integrating them into social systems can further enhance the value of mobility. Towards achieving carbon neutrality, it is essential to evolve commercial vehicles, which account for 40% of the world's automotive CO2 emissions into environmentally friendly mobility. In other words, the challenge of creating a new future for commercial vehicles will play an important role in the creation of a prosperous mobility society. The CASE technologies such as electrification and automated driving hold the key to this. CASE technologies are useful to society only when they are widely used. And this requires technological development capabilities. When it comes to surviving this era of CASE, the Japanese commercial vehicle market is small compared to the rest of the world, and this is difficult for each company to complete alone. To curate a prosperous mobility society, there is a strong need, not only for competition, but also for all of us to work together to build the future. With such in mind, we hope to accelerate the spread of CASE technologies through the 4-company collaboration. Through the merger, Mitsubishi Fuso and Hino will enhance the synergies between them and improve business efficiencies in development, procurement and production. By doing so, they will strengthen the business foundation and competitiveness of their CASE technology efforts. Daimler Truck and Toyota will bring together the strength of both of their companies to support the post-merger company with CASE technologies, while also working to further strengthen the technological capabilities between themselves. The gathering of our 4 companies will also open up new possibilities for the future. Particularly, we believe that initiatives in the hydrogen area are a major theme on which our 4 companies will focus and cooperate to realize a prosperous mobility society. From early on, Daimler Truck and Toyota have focused on the potential of hydrogen energy and have actively promoted the development of fuel cell and hydrogen engine technologies. We have also been working on the commercialization of products and the development of a hydrogen infrastructure to promote the widespread use of such technologies. Our 4 companies, including Mitsubishi Fuso and Hino, intend to accelerate the dissemination of hydrogen mobility, starting with commercial vehicles. To work together towards such a future, we will first establish a business foundation that can compete globally through the merging of Mitsubishi Fuso and Hino. And through healthy competition, we will contribute to a better future for commercial vehicles. With Daimler Truck's CEO, Mr. Martin Daum, I talked about changing the future of commercial vehicles, the necessity of scale for the dissemination of CASE technologies. And the idea that the future is for us to build together. While sharing these aspirations and values, we repeatedly discussed the ideal form of our partnership. We were able to confirm each other's vision in the process. And I believe that we had very meaningful discussions. I would love to have Mr. Daum to also share his thoughts about this collaboration.

Hello everyone. I'm honored to be here today with all of you and with our partners, Sato-san and Ogiso-san. I've worked in this industry for more than 3 decades. And this day definitely is one of the most special days in my entire career, because the news we can share with you today are truly great news. We intend to link the future of 2 amazing companies and to shape the future of the commercial vehicle industry in Japan, in Asia and even beyond. Let me give you some context. At Daimler Truck, we are very proud of our products. Each and every one of the 520,000 trucks and buses we sold in 2022 in North America, for example, with our Freightliner brand, in Europe with our Mercedes-Benz brand, and of course in Asia with our Fuso brand. I'm sure our partners here on stage feel exactly the same about their products. That's because trucks and buses truly fulfill a purpose. With our vehicles, our customers keep supermarkets, factories and construction sites up and running. And they bring people to work, to school, to their favorite destination. In short, trucks and buses keep the world moving. This is true today, and it will also be true tomorrow. So this will not change. One thing will change, however. Tomorrow, trucks and buses will need to be emission-free. This means our products will become even more amazing. They will not only keep the world moving, but they will do so in a sustainable way. So there is an absolute compelling future ahead of us. And at Daimler Truck, we can't wait to make this future a reality. We are fully committed to lead the technological transformation and to fight climate change. At the end of 2022, we already had 8 zero-emission trucks and buses in serious production. One prime example is our Fuso eCanter. We first launched our eCanter back in 2017 as a true pioneer. Just recently, we introduced our next-generation eCanter, which is already available in 70 variants. So far, so good. But we are accelerating towards zero emissions. That is one big challenge, and this is the required funding. The transformation of our industry means we have to fund several new drive technologies at the same time; batteries, hydrogen-based fuel cells, and potentially also hydrogen internal combustion engines. This is quite a stretch even for the leading companies in our industry. And there is only one way to make this parallel tech development work, economies of scale. Scale is key. It is absolutely essential to leverage investments and to spread them across a larger base. And today, we are making a bold move in this respect. We intend to combine the forces of 2 of the 3 largest commercial vehicle manufacturers in Japan, and this would increase the scale dramatically. The combined Fuso-Hino business would have full access to Daimler Truck's technology on the heavy-duty side. This merger would be complete -- will be a complete game changer. I'm glad that we found the perfect partner, who did the very same analysis and who has a very same vision. Everyone, I'm convinced that we are announcing today does not just have the potential to make our company stronger, to make our customers stronger by ensuring an even stronger product lineup and to boost the transformation to 0 transport. And this will benefit all of us. Thank you very much. Now I'd like to invite Karl Deppen to the stage.

Good afternoon. First of all, thank you very much for all of you coming here today and joining us around the world for our press conference. My name is Karl Deppen. I'm the CEO of Mitsubishi Fuso Truck and Bus company. You've already heard quite a bit about this project from my associates but let me give you also the Fuso point of view. I'll begin with some basic background. The Fuso brand was founded by the Mitsubishi Group over 90 years ago. Daimler took shares in Mitsubishi Fuso in 2003, and it now owns 89% of the stock. We sell commercial vehicles in around 170 markets. And Mitsubishi Fuso products are well known for their efficiency, reliability and superior safety. As leaders for the electric light-duty trucks, we recently started selling also the new eCanter. So with all that success in history, why are we now tying up with Hino? Simply put, the world is changing, and our industry needs to change with it. Japan's economy and the societies of Asia need state-of-the-art transportation. At the same time, Japan has committed to be carbon neutral by 2050. We take it as our task to be part of solution to decarbonize transportation. And today's customers demand even more. Connectivity, automation, electrification, a whole range of advanced services and technology to make logistics as safe, as efficient and as profitable as possible, all while causing the least possible harm to the environment. And I'll be frank, developing that takes enormous investment, resources and also expertise. To continue to offer our customers value while also staying successful ourselves, we need partners and we need industrial scale. And who better to tie up with than Hino Motors, a company as dedicated to the commercial vehicle industry as ourselves? Together, we will become a force, a strong Japanese truck company, with a complementary portfolio of products, a massive service and dealer network, and the workforce of highly experienced, motivated employees across the globe. With this bold move, we will more than double our resources. That means increased access to knowledge, expertise and a wider network of suppliers and infrastructure. More people working together to develop technology faster. It means better value for our customers. It provides opportunities for our employees. It will benefit our suppliers and our dealers. And it will safeguard the return to our shareholders as well. This merger will position us as the foremost player in Asian transportation industry. Strong enough to compete with all the new brands we see entering the market, especially outside of Japan. I am really looking forward to all the new possibilities this collaboration will open up. Another important point for me is the nature of that collaboration. From the time this discussion first started, I knew we needed a win-win solution for all parties involved. Merging 2 companies that have traditionally been competitors is, of course, a challenge. Despite everything we have in common, there is no denying that we are 2 independent companies, who have been in competition for a long time. But this collaboration can only work if we join as equals, respecting each other, respecting each other's strengths and working together to make a future brighter than either of us could find alone. That is why I'm so satisfied with the terms we have set for us here today. One company with 2 strong distinct friends, supported by the expertise and resources of Toyota and Daimler Truck. Of course, there's still a lot of work to do, a lot of questions to answer here in Japan and in all our markets, but that's why we are going to take our time and do things right. We are going to check every aspect of the project carefully over the next 18 months with the target to completing the transaction by the end of 2024. It is a daunting task, but I have full confidence not only in the fantastic team of Daimler Truck and Mitsubishi Fuso but also in our new friends at Toyota and Hino. So let me close by saying, thank you, and welcome to them as well. I am so excited to see what we will achieve in the coming years. We are going to grow together. Now on this note, pass on the floor to Mr. Ogiso, CEO of Hino Motors.

[Interpreted] Thank you. I'm Ogiso from Hino Motors. Hino announced our engine certification issue last year, and we take this misconduct seriously. To reestablish ourselves and prevent recurrences of similar incidents, we have announced in October last year our 3 reforms. To regain the trust from all of our stakeholders, starting with our customers, all of Hino employees are promoting the reforms one by one, wholeheartedly. Hino's strength is in the whole flow from sales to after services, not only for our products but from a total perspective, including quality, durability and maintenance. We work to contribute to our customers' business. As we continue to address the certification issue, there have been many people including dealers that have cooperated with us to support our customers in order to protect the Hino brand, even though we have troubled them greatly. Experiencing this support and feeling the importance of rebuilding ourselves, so that we can continue to contribute to our customers into the future. On the other hand, we find ourselves in a once-a-century transformation period, facing social issues such as carbon neutrality, lack of drivers, traffic accidents, et cetera. We have no time to lose in developing the CASE technologies. Hino has been focused on adjusting thoroughly the engine certification issues and also the initiatives for the future such as carbon neutrality. Together with our colleagues, we have been struggling and pondering on the question of how we can respond to the expectations of our stakeholders and customers. For the engine certification issue, we are starting to move forward little by little with our related activities, but when it comes to dealing with the environmental changes such as carbon neutrality simultaneously, this has been a challenge for us as a single entity. And this has been my longtime struggle. In this context, this collaboration between the 4 companies for us is a once-in-a-lifetime opportunity. Daimler Truck and Toyota, who are leaders in the CASE technologies and also the leading companies for commercial vehicles and passenger cars. And Mitsubishi Fuso, who also has a very long history as a Japanese commercial vehicle maker like us. Together with the 3 companies, we can unite ourselves to contribute to society through supporting mobility and to walk towards the future together. This is where I feel the great significance of this collaboration. Hino will work on dealing with the certification issues and reestablish our foundation with our own efforts and then create a future with these 4-company collaboration. Mitsubishi Fuso and Hino were the early entrants to the Southeast Asian markets, and both companies always try to be engaged in the local communities to contribute to people's lives through the flow of people and goods. In order to continue the contribution throughout to the future, this collaboration is absolutely necessary now. Hino will promote this project with all-company efforts. And after the merging targeted at the end of 2024, working together with Mr. Karl Deppen's team, I'm determined to create a team that can learn and empathize with each other.

[Interpreted] Now may we call all of the 4 CEOs to the stage again? We will have a final greeting from Mr. Sato and Mr. Daum.

[Interpreted] Today, we are taking a giant step in changing the future of commercial vehicles. We believe that the future will be built by working together. From now on, the 4 companies will take on the challenge of working together as one. We hope that you will look forward to what we will achieve. Mr. Daum, please.

For me, Toyota was always a shining beacon on the passenger car side, the leading company in the world. We -- at Daimler Trucks, we are the biggest truck company of the world, together with the strong commitment to technology as well. Together as our 2 companies, Fuso and Hino, I think this is a perfect combination to lead this industry in the future. And I really like the attitude from Ogiso-san and Deppen-san, how they described the works, the next steps, bringing those 2 entities together, fully aware that we have 2 proud, successful Japanese companies to make it to really the truly Asian leader of trucking.

[Interpreted] This concludes today's presentation. Those of you who are on the stage, please step down from the stage. Thank you very much.

[Interpreted] This is going to be followed by a Q&A session. And please give us a few more minutes, so that we can prepare the stage for the Q&A session. Thank you. [Operator Instructions] Today, we have journalists and reporters' station, both present in the call in person and those of you participating online. First, we would like to take questions from those journalists physically present here in the hall. If you have a question, please raise your hand so that the microphone can be brought to you. And we would like to receive questions from as many people as possible. So please limit yourselves to 2 questions at most 2 questions per person. The person in the front row, please, first.

[Interpreted] Nikkan, Automotive newspaper, Mizutori is my name. I have 2 questions, please. The first question is addressed to Mr. Sato and Mr. Daum, the CEOs of both companies. Could you describe the process that led to this collaboration? When did you start the discussion in what manner? And how did you reach this agreement on collaboration? Mr. Sato, you talked about leveraging the strength of those companies. What have you considered strength those 2 companies? There seems to be a difference in the strength between Hino and Fuso. Could you describe that? Mr. Daum, Hino is now working hard to reestablish itself from the engine problem. But despite that, you have decided to join hands with Hino. What made you to decide on that? The second question is addressed to Mr. Sato. Toyota has collaboration alliance with Isuzu. And Isuzu is partnered with Volvo, and it has duty as a subsidiary, and Volvo is working on [indiscernible] as well. So the relationship has become complicated. Of course, very important is to establish partnership to expand the commercial vehicle business, but how are you intending to enhance and maximize the synergy that can be generated in that complicated situation?

[Interpreted] Thank you very much for your question. Let me just describe the process that led to this collaboration. As you already know, we are making efforts, trying to achieve carbon neutrality and on the global scale through many partnerships that need to be pursued and various discussions are underway. Of course, we have been working on the hydrogen, and we have been trying to achieve different options that we can provide in the industry. And in that context, we have been discussing with many partners and many parties. In this context, when it comes to hydrogen and CASE technology for them to be used on the widespread uses, we believe it is very important to achieve a collaboration in the commercial vehicle business. And that importance was brought to our attention by Mr. Daum last year for this strengthening of our efforts, achieving carbon neutrality as well as enhancing the technology. We decided to discuss the potential for a collaboration. And including that, we have decided to enhance competitiveness on the global scale with 4 companies collaborating with each other. And that brought us to decide on this decision. In this broad-based collaboration, that's the only way that we can create the movements, moving toward the achievement of carbon neutrality. And that is the common beliefs underpinning the determination of all 4 companies. Should I ask Mr. Daum to respond to the same question as well at this juncture?

[Interpreted] Yes, please.

Yes. Thank you. That -- and it was potentially 10 questions in 1 sentence when you ask your -- and I try to answer some of them at least. I would say the process started when we -- when Toyota company, Sato-san, Daimler Truck, myself and Deppen-san, we looked especially first of all, in the future vision. And we shared it, yes? It has to be a carbon-neutral worldwide technology in the trucking side. And we all agree that truck is extremely broad. It goes from really small delivery, small trucks to the really heavy-duty trucks, doing mining or construction work. And while everyone has its strengths, we, for example, at Daimler Trucks, especially on the heavy-duty side. We have our significant weaknesses. For example, when it comes to light duty, where we have only a small volume of scale basis. And then Toyota and Daimler Trucks immediately agreed that this would be a perfect way to increase the scales we have and we need for technology. And then there was always a second thing, which the 2 of our companies -- that links the 2 of our companies. And that is the belief that the future -- the carbon-neutral future of automotive mobility is hydrogen. And therefore, I'm really excited to work together on the Daimler Truck level together with Toyota, when it comes to promote hydrogen as the solution, my opinion to carbon neutrality on mobility.

[Interpreted] Thank you very much, Mr. Daum. And let me respond to the content of your second question. First of all, with respect to our partnership with Isuzu, we will continue collaboration thoroughly, and we will try to generate synergy, we will continue to do that without any fail. But at the same time, for the past few weeks, we have been working on the framework of CJPT, which carries a great significance with respect to the CASE technologies. The planning is important and also expand the quantitative scale and also the development of infrastructure. This requires multi-faceted approach. And for planning to create some consensus and create an important process while leveraging the framework of CJPT, we would like to continue very proactive actions. And when it comes to actual activities or initiatives, of course, it will be pursued by individual companies in their own project. And connecting those different projects will accelerate the speed of giving concrete shape to different projects. So including Isuzu, we would like to accelerate the movement toward the achievement of CASE technology. Thank you.

Next person, please. Person in the second row from the left side, the woman.

[Interpreted] I'm [ Take ] from Nikkei Asia. I also have 2 questions. My first question will be about Toyota and Daimler having a collaboration through this holding company, the emerging company and to develop the hydrogen and CASE technologies. So specifically, what -- how will the 2 companies work together? What kind of technologies does each company own for CASE technologies? And how are you going to try to create synergy? I want to learn more from a specific point. And the next is about the new company that will be created. On the press release, it said that you're looking towards to having a -- being powerful in Southeast Asia. Specifically, what will that mean? And right now, how do you look at the commercial vehicle market? For the passenger car in Thailand, Indonesia, India and the Chinese markets are now evolving greatly. But what about the commercial vehicle side? What is the market situation there in the Southeast Asia market? And related to that, I think Toyota is quite active in the Thailand market for hydrogen technologies. So how will that initiative be related to this new company? Will it be related or not?

[Interpreted] For this question, probably we should ask Mr. Deppen to respond first.

Yes. Thank you. I think the situation we see in the Southeast Asian market outside Japan is, of course, also quite complementary. And what you have described, [ Take-san ] is a good observation. We see a lot of new competitors entering the region. And both companies have a very strong footprint in Southeast Asia but in quite complementary markets. So I think we have a very good addition if we combine the 2 strong companies, both enjoying very strong brand in the region, strong networks, strong distribution and service networks that will help us to compete even better in the very competitive field of Southeast Asia. And as you know, the markets are very different depending on the regulations and emission standards. So we are confident that the 2 companies combined can contribute tremendously also towards the development and decarbonization in Southeast Asia.

[Interpreted] Thank you. For the second question, I think it is a similar perspective, but from -- we think we can receive responses from Mr. Deppen and Mr. Ogiso.

Yes, I think maybe I start. Of course, Toyota and Daimler Truck, both have a lot of cooperation. And I think we all strive for the ambition to decarbonize road transportation. And that has already led to significant knowledge and experience among all 4 companies on fuel cell technologies, hydrogen technologies and battery electric technology, but the investments are tremendously high. And this is a good time to bundle the strengths and combine resources to be even stronger and faster in making an impact for customers as well as for society.

[Interpreted] Thank you. So I think I would also like to provide in response to that question from Ogiso. So Hino Motors and Mitsubishi Fuso, there was a point that raised that the 2 companies may be similar. But what Mr. Deppen said, it covers everything that I wanted to say actually. And earlier from Mr. Daum, he has explained that, when we think about achieving carbon neutrality going forward, hydrogen and the fuel cells and maybe the hydrogen combustion engine, E-fuel battery, EV, various technologies will be necessary to achieve carbon neutrality. And even inside of Hino Motors as I explained, we have been considering from various aspects, but it's very difficult to work with one company alone in all of these areas. And a similar market, we are competing with Mitsubishi Fuso, but now joining hands with our path -- this conventional rival in a new area, we can cooperate. With that the potential we see and so that we can respond to our customers' needs. And we've talked about -- the question was about Southeast Asia, the same answer applies to Southeast Asia. Up to now if you were just working with the combustion engine, then at the time of this once-in-a-century transformation, we think it's important that we work together with like-minded partners, not just work as one company and not just as 2 companies, including the 4 companies with Daimler Truck and Toyota having this framework of 4-company collaboration. I think this will be very valuable to make contributions to our customers and society.

[Interpreted] Next person please. Third row on this line, seated on furthest right. There is one other point in the question relating to Toyota's efforts in Thailand, the initiatives Toyota is taking in Thailand. And maybe Mr. Sato can respond to that question.

[Interpreted] Terribly sorry for forgetting that very last part. About the initiatives, we are engaged in Thailand that you asked about as we made an announcement some days ago, covering hydrogen or mobility solution and data solutions. We are taking a multifaceted approach, trying to find solutions that could help and also help support the customers in Thailand. And we will execute and implement our activities in Thailand and new technology and trying to earn the smiles on the faces of Thailand. We will take up those challenges, and that will be very important going forward. So with like-minded partners, working with them and in the project-oriented manner, the partners that we can join hands to implement those projects, we would like to pursue that further. In terms of concrete initiatives, on the case-by-case basis, we would like to discuss and identify in what areas we can work together in that context on one by one. Thank you.

[Interpreted] Thank you very much. So let me ask the next person to ask the question.

[Interpreted] Sankei Newspaper, Ikeda is my name. Two questions, please. Earlier, it's been mentioned about this framework, you talked about the economy of scale, importance of scale. Specifically speaking, both, in Japan domestically and worldwide, of course, you mentioned the truck has a very broad base. It's covered by a wide area. But through this collaboration, what is going to change in terms of market share? In Japan, Hino has a certain set of market share and joining hands with Fuso, how is that going to change? And in the world, maybe especially in Asia, concretely speaking, in terms of market share, how are you intending to increase your scale by joining hands? Could you just share with us some numbers and also the background corroborating those numbers? And another related question through merger integration, there may be various regulations that you need to go over. That is to say the antitrust laws or anti-competition laws. Is there any hurdles that you need to overcome in different regions? And should there be any hurdles in any region, is there any possibility that you need to separate or carve out certain business? Have you had any discussion on that? So that's the first question. And the second question with respect to emerged -- a new company and also the capital structure of that between Toyota and Daimler Truck. Now you talk about equal shareholding. Are you talking about just 2 companies being the shareholder of that newly merged company or with respect to Mitsubishi Fuso, Mitsubishi Group may have invested in that, in the holding company. What is -- is there any chance that Mitsubishi Group or Mitsubishi companies might invest in that holding company as well? And you also talked about holding company being listed. I think you mentioned that. Now if you are intending to list that holding company, in what form is it going to be listed? Where is it going to be listed? Is it going to be listed in Tokyo or in Europe? And under the current framework, some of the companies would be delisted with only holding company listed in those markets? And in the case of Toyota, on the consolidated business and business performance, Hino will remain consolidated and bringing about no change in terms of Toyota's performance, including Hino.

[Interpreted] I think the question was quite long. And therefore, let me just summarize that. First question related to potential change in the numbers, especially in market share in different markets. And in that context, is there any possibility of blatant violation of anti-trust law or anti-monopoly law? Either Mr. Sato or Mr. Daum, as CEO, could you take those 2 questions, please?

[Interpreted] Let me try to respond to that first, with respect to our understanding of the market. The worldwide market from that perspective, the medium-sized and heavy-duty trucks, the size of the market is around 3 million to 3.5 million units. And of that, Hino is 250,000 units and Mitsubishi Fuso 150,000. So together around 400,000 units will be achieved as a result of the merger. So that's the economy of scale that can be achieved at scale accomplished. In terms of the domestic market here in Japan, the market share here, we have Isuzu and [indiscernible] truck, the merged company will have the equivalent share against those. So by having friendly competition, we will try to create, to build the better future of the commercial vehicle market to realize -- to be realized through this merger. And that's how I would like you to understand that. And moving on to the second question. After the merger and the capital and [indiscernible] scheme of the merged company after the integration as shown on this scheme or diagram, Hino and Mitsubishi Fuso, both of these companies will merge with each other. And the holding company, holding this company -- a holding company will be established and then Hino and Mitsubishi Fuso will become a subsidiary of that holding company, and they each will pursue their positive merger activities. Under this new company, they will collaborate, trying to generate synergy of merger for development, procurement and production will concretely flesh out this scheme. About this holding company, the holding company is going to be listed. And so under that listed company, Hino and Mitsubishi Fuso, their brand will enhance their competitiveness as the subsidiary company, under that 100% wholly owned companies. In terms of competition and growth, we'll ensure equal and fair competition is something that we aim that, that's the basic premise for our endeavors. And so based on that basic premise, and we will comply with the principles. We have already begun consulting with the relevant authorities, and we'll try to obtain understanding and the approval by those authorities. And we intend to spend enough time, so that synergy being generated through this while gaining understanding, the approval of the relevant authorities. So that's how we would like to pursue this. So I just combine my response to the first and second questions. So that's my response to your question.

I want to second that, what Sato-san said. And potentially, you can bring back that last slide, because it has a couple of really basic principles, which had been for us, extremely important when we started the talks a couple of months ago. First of all, Hino and Fuso have to meet on eye level. These are 2 very great successful Japanese brands. And we want to keep the distinct brand identity of each and every one. Therefore, the sales organization, not just in Japan, but globally, will stay intact and separately. On the other side, we want to maximize the synergies between the 2 companies to joint development, joint procurement, joint production. And third, this will be a Japanese company, as therefore listed in Tokyo. Daimler Trucks is a global company. A global company is something different than an international company. International company is a German company, try to export everywhere in the world. Daimler Truck is an a international -- global company. We are American in America. We are German in Germany certainly. And we are Japanese in Japan. And therefore, this joint company has to be a Japanese company, and it has to be the strongest Japanese company ever on the commercial vehicle field. And that's a promise from Daimler Truck, that's a promise from Toyota. And that certainly will include a couple of outside investors because if you are listed such as 2 companies, it needs to be a sufficient free float on the Tokyo Stock Exchange. And we're committed to that, and we will do everything possible to make it happen.

[Interpreted] Allow me to confirm the following point. Looking at this diagram, this scheme, the investment by Mitsubishi, is it going to disappear? Looking at the holding company, the shareholders are only Toyota and Daimler Truck and also the general shareholders. So those business operating companies are wholly owned by the holding company, but Mitsubishi has its capital in the Mitsubishi Fuso, how is that going to be handled, treated with going forward?

First of all, when both companies merge, certainly, everyone who is today a shareholder, either in Hino or in Fuso, will have a proportionate shareholding in the holding company. That will be determined during the next couple of months. And then we announced today, it's just the MOU. And a lot of work is ahead of us, but then it will be announced and whoever today shares either Toyota or shares in Fuso or in Hino will later have shares in the holding company and can do whatever this company wants to do in Mitsubishi Fuso. Mitsubishi certainly will be then a shareholder in the holding company as well.

[Interpreted] Thank you. We will move on to the next question please. The person in the front.

[Interpreted] I'm from Asahi Shimbun. My name is Kondou. My first question will be slightly similar to the asked question about the history of this collaboration. For -- I want to ask Ogiso-san and Deppen-san, this question. And then my second question is for Sato-san. For -- to Ogiso-san, once again, I'd like to ask a question that for Hino, you had the discovery of the misconduct last year in March. And as a company, you are still in the middle of reestablishing yourself, and there will be the litigation issues, class action issues as well for Hino that you're working on. And the framework that you have announced with Mitsubishi Fuso, the discussion that you're having right now. From Hino's perspective, what kind of problem awareness do you have? And when did you start to participate in this discussion? What was the -- how -- this history of how this led to today for you? And also for this situation, this merger, is Hino already a company worth of becoming merged with Mitsubishi Fuso? So I want to ask that question to Ogiso-san. And to Deppen-san, it is related question. The company's situation probably for Hino is not fully healthy right now. But even though of that situation, you have selected Hino as your partner. So what was the part that you evaluated about Hino? And still, the misconduct issue has not completed yet for Hino. So I think you should have some anxieties going forward. And if you do, I'd like to know about that. And the second question is for Sato-san. It will be a similar question. After the misconduct of Hino was discovered, as a parent company, Toyota had been -- received a lot of criticism about the internal control as a corporate entity. And in your company in Toyota, I've heard that you had a lot of discussions about internal control. And on the other hand, between Toyota and Hino, you have different businesses, passenger cars and commercial vehicles, and it was difficult to find synergy between these 2 businesses. That was the explanation in the past. So once again, I'd like to ask about the perspective of internal control. And when you think about the growth of Hino as a company, probably inside of the company, there is a possibility to increase the shareholding of Hino by Toyota and work together more. I think that was one option. But why is it that you made this decision? Why did you come up with this framework of collaboration between the 4 companies?

[Interpreted] Then for the first question, please Ogiso-san start.

[Interpreted] Yes, thank you. For your first question, I'd like to respond. You are correct. Last year, Hino -- when we had the misconduct of the certification process discovered, Hino has taken this seriously, and we are determined to address this issue, so that we can recover the trust back. And we are working on the necessary measures and activities one by one. We have been working on this, promoting this, but we have not completed all of the activities that we need to do. So we need to steadily work on this, be sincere to our customers and promote this one by one. And the valuation is not something that I do, whether we are cleared or not. It -- the evaluation of whether we are a okay company is something that the society and the customers will do. So I will continue the efforts thoroughly, so that our customers can put trust back on our company. And for -- however, on the other hand, we need to be prepared to the future for such social issues like carbon neutrality. And as I have explained by just our own single efforts, we are not able to create a picture or vision for the future for Hino. And in that context, we have received this offer to participate in this collaboration. And that is why we wanted to join. And because we want to join this collaboration, we are going to be fully committed and sincerely work on fixing the problems and address all of the issues related to the problem.

[Interpreted] So Deppen-san, please?

Yes, of course, we have been in the marketplace with Hino for a long time as competitors, very clear. And also, we at Fuso, we respect Hino as a strong brand and a strong company with a strong customer base and a lot of brand loyalty in the marketplace. So from that perspective, we have high respect for the strong company. We also see the efforts that are being taken to overcome the past, as Ogiso-san just mentioned. And what was appealing to us as well is Hino is also a pure commercial vehicle company and therefore, facing all the same challenges we are facing in terms of scale and future investment. And this is why we felt confident that there must be a common ground to engage for the future development of decarbonized technologies together. And I think when we started the discussion, this has proven to be quite effective, and that brought us here today.

[Interpreted] Thank you. Then I'd like to respond to the second question that was raised. Regarding corporate governance and from the intention of our question, probably, you want to ask about the group covenants of Toyota. And [indiscernible] around our Chairman, Mr. Toyota, Toyota has been trying to regain the Toyota-ness or uniqueness of Toyota, and we have various initiatives and activities been implemented to do that. And when we think about governance, there are several aspects and factors. One will be about the capital side and the other thing will be about the operation. And then there will be about the sharing of vision. So from a multifaceted way, we're trying to approach this corporate governance issue. And this time, regarding the Hino case, the root of the management is the products. So it is in the operation field, making -- in the area of making cars, Toyota is not able to fully utilize the know-how that we have in the areas that Hino is operating in. And even up to now for the relationship with Hino, we always have been thinking of what will be a better relationship, what will be the better environment that we can create together? That's the kind of discussion initiative has been done. But we have always come back to this difference with the business side, which is the difference in passenger car and commercial vehicle. So there is a limitation in Toyota supporting Hino, which is a commercial vehicle business company. So from that perspective, we have decided that with the 4 companies' efforts, we're going to create a future looking big framework for the -- to create the future of commercial vehicles. And with that shared vision, we were able to create this relationship between the 4 companies. So within that framework, we want to seek the -- and borrow the strengths of Daimler Truck for which strengths we don't have and also for Mitsubishi Fuso, we want to receive advice from perspectives that we don't have, so that we can create a better Hino for the future. And that is what Mr. Ogiso has talked about with a strong determination that he has. And as he has said, we are determined to work together, so that we can promote also the efforts for Hino to move toward the future.

[Interpreted] Thank you. And from here, we'll go on to receiving questions from those participating online.

[Interpreted] [Operator Instructions] Nikkan Industrial Newspaper, Masatoshi-san, please.