oyota and its affiliated companies are set to sell approximately 700 billion yen (US$4.7 billion) worth of shares in automotive parts supplier Denso. The sale, equivalent to around 10 percent of Denso, will see Toyota retain its position as the largest stakeholder despite divesting about half of its shares. Toyota Industries and Aisin, subsidiaries of the automaker, will contribute to the share sale.
Denso, in response to the impending share offload, plans to repurchase some of the sold shares to prevent a significant drop in its stock price. However, early reports have already led to a 4.9 percent decline in Denso’s shares.
As of September, Toyota held a 24.2 percent stake in Denso. Even with this transaction, reducing its stake by approximately five percent, Toyota is expected to remain the foremost shareholder in the company.
While Toyota has not officially disclosed the rationale behind these actions, industry analysts speculate that the move is aimed at generating capital to support the automaker’s increasing focus on electric vehicle (EV) production. Toyota is heavily investing in EV technology, including the deployment of new gigapresses and the development of longer-range EVs featuring advanced technologies such as solid-state batteries. This capital-intensive endeavor involves substantial research and development costs and production changeovers.
If approved, this transaction would mark Japan’s second-largest share offering this year, trailing only a sale of Japan Post Bank shares, and represents the most significant transaction in the automotive industry in over a decade. The development aligns with Toyota’s broader strategy of diversifying its vehicle portfolio to include hybrid and hydrogen vehicles while concurrently advancing its position in the competitive EV market.
