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Toyota's Bold Shift: Selling Denso Stake to Fuel EV Ambitions

Published by MEXEM EUROPE

July 26, 2024
(GMT+2)

Toyota's Strategic Divestment:

Toyota Group {{ m-tag option="price" ticker="TM" currency="USD" }}, the world's top-selling automaker, is taking a significant step in its business strategy by planning to sell approximately 10% of its stake in auto supplier Denso {{ m-tag option="price" ticker="DNZOY" currency="USD" }}. This move, expected to be completed by year-end, is valued at around $4.7 billion. Toyota Motor, which held a 24.2% stake in Denso as of September, aims to remain the top shareholder post-sale. This decision aligns with Toyota's broader shift towards electric vehicle (EV) production, a sector demanding substantial research, development, and infrastructure investment.

Musk's Dismissal of Hybrids:

Simultaneously, Elon Musk, CEO of Tesla {{ m-tag option="price" ticker="TSLA" currency="USD" }}, has been vocal about his skepticism towards hybrid vehicles, labeling them as a mere "phase" in automotive evolution. Despite Musk's dismissal, Toyota has doubled its investment in hybrid technology, which is paying off. In 2023, hybrid vehicle sales surged by 48% in the first three quarters, outpacing the growth in the EV market, which has shown signs of cooling.

Unwinding Cross-Shareholdings:

Toyota's move to sell its Denso stake is a more significant trend among Japanese companies to unwind cross-shareholdings. This practice has been under scrutiny for its impact on capital utilization. This sale is expected to attract domestic investors, with the share price yet to be determined. Denso, a key player in the automotive component sector, plans to counterbalance the potential impact on its share price by buying back some of its shares in the open market.

Toyota's EV Market Focus:

The decision by Toyota to divest from Denso and focus more on hybrid and EV technologies reflects a strategic pivot in response to the evolving automotive market. This move is particularly significant given the backdrop of Toyota's recent decision to sell a stake in telecoms company KDDI, further underscoring its commitment to the EV sector.


The information on mexem.com is for general informational purposes only. It should not be regarded as investment advice. Investing in stocks involves risk. A stock's past performance is not a reliable indicator of its future performance. Always consult a financial advisor or trusted sources before making any investment decisions.


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