Freeing Up Factories: Toyota to Consolidate Electronics Operations Within Denso
Toyota Motor Corp. says it had reached an agreement to consolidate all of its core electronics component operations within Denso. The move should allow Toyota to free up resources to compete more effectively in the new vehicle technology field.
Japan’s largest automaker noted it still has to discuss the logistics of transferring production of parts produced at its Hirose plant, near Toyota’s global headquarters, before the end of next year. But Denso, the company’s largest supplier, has already agreed to the core concept of the deal. By 2022, Denso will have taken over the mass production of all electronics components used in Toyota’s vehicles.
Taking advantage of the close relationship with a supplier it already owns a majority stake in allows Toyota to streamline some of its in-house parts production as it looks beyond making conventional automobiles.
“They’re basically pulling in all of the forces they need among the group companies to go electric. It’s reinforcing that they will be working very closely with Denso,” Janet Lewis, head of Asian transportation research at Macquarie Securities, told Reuters. “This move highlights the scope and scale of investment needed to develop all these new technologies.”
Toyota claims that, by consolidating mass-production development and production of electronic components of both Toyota and Denso within Denso, the pair could establish “a speedy and competitive development and production structure.”
The automaker could also focus more on the aforementioned new vehicle tech. With additional factory space and less production overlap, Toyota can turn its attention to assembling the components necessary for electric vehicles and autonomous hardware.
Both companies are strengthening ties within the industry to pool resources and avoid rising development costs. Toyota teamed up with Suzuki and Mazda to develop lower-emission internal combustion cars, while simultaneously working with Panasonic to develop next-generation battery technologies. Meanwhile, Denso formed partnerships with established electronics manufacturers like Toshiba Corp. as it cherry picks tech startups like ActiveScale.
[Image: Toyota]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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