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Denso Sells Stakes in Toyota Group Companies, Shifting Focus to EV Investments

Japan
d 6902.TSE t 7203.TSE Blue Chip 150
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In a significant shift within the Toyota group, Denso, a leading Japanese auto parts supplier, has divested its entire stake in three affiliated companies, including Hino Motors. This move, amounting to approximately 5 billion yen ($35.2 million), marks a broader trend within the group to dissolve long-standing cross-shareholdings. The decision reflects Denso’s strategy to reallocate resources towards burgeoning electric vehicle (EV) technologies.

The sale includes shares in Hino, parts manufacturer Toyoda Gosei, and Aichi Steel. Denso’s objective is to enhance earnings per assets, directing the proceeds towards investments in the fast-evolving EV sector. As of the end of March, Denso was one of Hino’s top shareholders, indicating the significance of this divestiture.

The companies involved, including Hino, Toyoda Gosei, and Aichi Steel, also hold Denso shares collectively valued at 1.3 billion yen. These shares are anticipated to be sold as part of the strategic unwinding of cross-shareholdings, freeing up capital for each company amidst the automotive industry’s shift to electrification and autonomous driving.

This move aligns with the broader strategy of the Toyota group. Toyota Motor, Toyota Industries, and Aisin are set to sell up to 610 billion yen worth of Denso stock. Conversely, Denso plans to offload 520 billion yen worth of shares in Toyota Industries and Aisin and has announced the sale of all shares in Tokai Rika, a mid-sized parts company.

Denso’s initiative to reduce cross-holdings dates back to 2019, with a significant reduction from 43 stocks to 20 as of the end of March this year. This strategic repositioning, echoed by parts makers Aisin and JTEKT, underscores a pivotal shift in focus within the Toyota group, prioritizing innovation and investment in the EV domain over traditional cross-shareholding structures.

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