Denso’s shift in strategy to craft core technologies for Future of Mobility

Denso corporation, the world’s second largest mobility supplier, has made recent changes that represent one of the largest shifts in business strategy in its 70-year history, expanding into software-based solutions in addition to its hardware expertise, that push the company beyond a vehicle-centric focus in order to help create an new mobility paradigm for society.

The global auto industry is undergoing a once-in-a-century shift that will fundamentally reshape transportation. Given the changing cast of competitors that make up the evolving auto industry, Denso has transformed its conventional business model.

Denso’s long-term policy, which was launched last year, guides the company toward its 2030 goal: to create and inspire new value for the future of mobility. Denso has now launched its 2018 Annual Report, which is the first account of company activities following the release of its long-term policy. The policy and report reiterates Denso’s strategy to achieve vision, including:

  1. Increasing performance in the fields of electrification and automated driving;
  2. Realigning organizational structure to accelerate business execution, R&D, collaboration, and other efficiencies; and
  3. Focusing on key initiatives both in and outside the auto industry to add value.

“Our long-term vision is a future with enhanced mobility, safety and peace of mind, with less impact on the environment. We still have a deep commitment to protecting lives, but we are ready to realise our second founding,” said CEO Koji Arima. “This means we must change our own organisation to prevail in the rapidly changing business landscape and provide value to our customers that goes beyond a vehicle-centric focus to enrich society’s broader needs.”

Denso will continue to increase its performance in the fields of electrification and automated driving to achieve sustainable growth. The company aims to achieve revenues of JPY7 trillion ($62 billion) and an operating profit ratio of 10% by 2026.

The $1 billion investment in its Maryville, Tennessee, location significantly advanced the United States’ role in crafting the future of electrification and safety technology and made Maryville a primary manufacturing centre in North America for electrification and safety systems. The investment also expanded multiple production lines to produce advanced safety, connectivity, and electrification products for hybrid and electric vehicles.

These new products will radically improve fuel efficiency and preserve electric power by recovering and recycling energy, and by connecting all systems and products inside the vehicles.

Denso plans to focus on the areas of electrification, automated driving and connected cars to advance the future of mobility. It will also focus on non-automotive business, particularly on factory automation and agro-industrialisation. Recent investments and partnerships in these key areas include:

  • Electrification: Aisin seiki and Denso have reached a basic agreement on the establishment of a joint venture company to develop electrified drive modules and are preparing for establishment.
  • Automated Driving: Aisin seiki, ADVICS, JTEKT and Denso have signed a basic agreement concerning the establishment of a joint venture for the development of integrated ECU software for automatic operation and are preparing for establishment. Additionally, Denso’s investment in ThinCI speeds the development of semiconductor devices with deep learning capabilities required for next-generation automated driving technology.
  • Connected Cars: The investment in CREATIONLINE upgraded Denso’s system to develop cloud solutions and open source software. Denso’s collaboration with Ridecell advances the development of carsharing and ridesharing technologies and services.

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