Toyota Plans $4 Billion Divestment in Denso, Fueling Speculation on Cross-Shareholding Shift

Japanese auto giant **Toyota**, along with its affiliates, plans to divest 8% of automotive components maker Denso in a USD 4 billion deal. This move, reported by Reuters, marks Japan’s second-largest deal in 2023 and the largest in the global auto industry in over a decade. Denso, the world’s second-largest maker of automotive components, will repurchase some of its shares in the open market. Investors anticipate Toyota’s potential acceleration in shedding cross-shareholdings, criticized for hindering governance and returns, aligning with the Tokyo Stock Exchange’s call to optimize capital use.

Toyota’s latest divestiture follows the automaker’s record-breaking October 2023 global vehicle production, reaching 900,285 vehicles, a 16.7% YoY increase. Overseas production hit a record 8.7% surge at 617,590, with global and overseas sales peaking in October at 7% and 5.2%, respectively, totaling 890,241 and 756,245 units. This strategic move is expected to free up capital within Toyota’s balance sheet, with speculation on how the automaker will utilize this capital going forward, according to James Hong, the head of mobility research at Macquarie.

Toyota.