Shares of Hino Motors, Toyota’s truck-making arm, dropped sharply on Wednesday after news broke of a planned merger with Mitsubishi Fuso, a subsidiary of Germany’s Daimler Truck.

The move is being seen as a major effort to stay afloat in a fast-changing global market, where traditional players are feeling the pressure from trade uncertainties and China’s growing roster of electric vehicle (EV) makers.

In a joint announcement, Toyota and Daimler Truck said they plan to bring together Hino and Mitsubishi Fuso under a single holding company. The merger is expected to be completed by April 2026. The goal: form what they called “a new strong Japanese truck powerhouse.”

The structure will be an equal partnership, with both Toyota and Daimler Truck aiming to hold 25 percent each in the new listed company.

Investors didn’t take the news lightly; Hino’s shares tumbled more than 12 percent in trading.

The companies said the integration aims to boost efficiency in key areas like development, procurement, and manufacturing. By teaming up, they hope to sharpen the edge of Japan’s commercial vehicle sector and firm up its place in Asia’s shifting automotive landscape.

Part of the strategy involves pushing ahead in future technologies.

The new entity will focus on electric and hydrogen-powered trucks, as well as autonomous driving systems, fields where Japanese truck makers are trying to catch up. Japan’s automakers, many of which have prioritized hybrids over full EVs, are now grappling with the speed of change.

Meanwhile, Chinese brands like BYD continue to expand aggressively. With the world’s largest EV market in its backyard, BYD has quickly become a major global player, making life even tougher for older manufacturers trying to reinvent themselves.