Hino Motors Ltd., Japan's largest truck maker, and Isuzu Motors Ltd. will merge their bus units and may combine truck operations.

The move is intended to reduce overall costs and boost sales by improving product quality. The companies said they will form an equally owned joint venture within a year, and begin joint production of buses within three years.
The venture will combine bus manufacturing, purchasing and research and development. The buses will be sold under both the Hino and Isuzu brands.
Including the bus business of Toyota Motor Co., which owns 18% of Hino, the alliance will create Japan's biggest bus maker, with 50% of the country's $1.9 billion annual bus sales, according to Bloomberg News. Mitsubishi Motors Corp., now No. 1, has a 36% share. Toyota is second with a 21.4% share of Japan's bus market; Hino has 17.8% and Isuzu has 9.7%.
The companies didn't elaborate on the possible truck alliance. Industry truck sales in Japan totaled 81,400 units in the year ended March 31, down 57% from peak sales of 190,000 units in fiscal 1991.
Hino is the market leader with a 28.8% share, followed by Mitsubishi Motors' 27.1%, Isuzu's 25.4% and Nissan Diesel's 18.7%.