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Toyota-affiliated suppliers stand out for their good performance due to environmental improvements

Looking at the most recent results for the third quarter of FY2023, Toyota-affiliated supplier companies also stand out for their strong performance, thanks to a recovery in vehicle production and price transfers as a result of the easing of the semiconductor shortage.

In terms of their full-year forecasts, Denso, Toyota Boshoku, JTEKT, Tokai Rika, Toyoda Gosei and Toyota Tsusho are likely to achieve their sales revenue (sales) targets for FY2025 or FY2030 ahead of schedule, backed by the strong performance of their main customer Toyota, while Aisin and Toyota Industries Corporation are performing well, with achievement within their sights. The most pressing issue for the time being is to respond to demand.

The strong performance of the companies may lead them to raise new profit targets in the future, but at present they are more likely to set conservative targets due to uncertainty about the future, so it is more likely that they will give priority to strengthening their structures by lowering their break-even point rather than expanding sales.

The recent positive results are also likely to have an impact on the company’s efforts in new areas that are not an extension of its existing business. While the company will be busy responding to requests for increased supply from the car manufacturers it delivers to, whether to allocate the funds generated by increased profits to responding to increased production or to investing in new businesses will be an important management issue for the medium to long term.

For manufacturers whose businesses are linked to CASE developments, concentrating resources on CASE responses will lead to immediate development, while manufacturers whose businesses are far from the mainstream of CASE will have to decide whether to enter new CASE fields or find a way to expand sales in new areas. The question is whether they should enter new CASE fields or find a way to expand their sales in new areas.

However, as leading manufacturers are establishing a presence in the fields of electrification, automated driving and ADAS, and it is a hurdle for new entrants to demonstrate competitiveness in the mainstream of these fields, efforts to enter new areas are also important. The current strong performance has eased the urgency to shift business portfolios to new fields, etc., and there is more or less room to proceed with reform at a reasonable speed, but as a management strategy to bridge the gap between the growth curve and the medium- to long-term goal, the development of new businesses is a theme that all manufacturers in the automotive industry should be addressing. It is a theme that needs to be addressed by all manufacturers in the automotive industry.