New-Japan Business Consulting
Business strategy reports, business matching and M&A in Japan


Toyota sells part of its stake in Denso to secure investment for growth by improving the efficiency of capital ties within the group.

On 29 November 2023, Toyota announced that it had decided to sell part of its Denso shareholding.

At the same time, it also announced that it was considering reviewing capital relations with other Toyota-affiliated companies. In recent years, investors and others have been taking a hard look at cross shareholdings from the perspective of capital efficiency and corporate governance, and Toyota aims to respond to these concerns and secure investment for growth in new fields such as CASE by reducing its cross shareholdings within the group. Group companies Toyota Industries Corporation and Aisin have also announced plans to sell their shares in Denso. Starting with the sale of Denso shares, Toyota has indicated its intention to reduce its shareholding in other group companies to around 20%, which would be recognised as profit or loss in accounting terms.

In addition to the pursuit of capital efficiency within the Toyota Group, the sale of Denso shares has significant implications for Denso’s growth strategy. In the last ten years, the ratio of sales to the Toyota Group (including affiliated companies) has exceeded the majority, and in aiming for stable growth over the medium to long term, the expansion of transactions with companies outside the Toyota Group has been a longstanding management issue. Furthermore, the fact that 90% of consolidated sales of over 6 trillion yen are to the automobile industry is also a risk, and diversification of business is recognised as an important management issue, with Denso aiming for sales of 300 billion yen by 2030 in three new fields: agriculture, logistics and factory automation. The reduction of Toyota’s stake in Denso will give Denso greater management freedom, so while continuing to maintain its role as a software driver within the Toyota Group, Denso will actively utilise its wide range of technologies, including motors, air conditioning and robotics, to expand its business in the above three fields as well as in the semiconductor and aeromobility fields. The company is expected to further expand its sales outside the automotive industry in the future, such as in semiconductors and pneumatic mobiles, in addition to the three fields mentioned above.

The review of the investment relationship this time is a win-win situation, as the Toyota Group companies’ aim to generate investment for growth by selling their shares and Denso’s aim to strengthen its management freedom to expand new businesses, against the background of having built a strong relationship of trust that does not rely on the investment relationship, as the roles within the Toyota Group have been clarified by the progress of home-and-away. The move is expected to be a win-win situation, and is being watched as a move that has the potential to spread to other companies within the Toyota Group.