TOKYO — Several major auto parts suppliers, particularly listed subsidiaries of Japan’s Toyota Motor Group, have slipped new ambitions into proposals for their upcoming annual general meetings, with plans to diversify their businesses into sectors such as automotive. agriculture and health care.
Diversification strategies have always been a concern for OEM management in the turbulent automotive industry. The companies will meet with shareholders in June to convince them that they are ready to move beyond car dependence alone.
Denso, a leading equipment manufacturer, is among the companies proposing changes to its articles of association. Although it already handles a diverse range of automotive-related products, from engine parts to car air conditioners, the company will add agricultural activities to its operations.
Denso began its foray into agriculture in March 2020. The company invested in Certhon Group, a greenhouse supplier based in the Netherlands, and jointly established a sales company, Denso AgriTech Solutions. The new company aims to develop large-scale indoor farming facilities in Japan and is currently conducting an automated tomato harvesting demonstration in the west of the country.
The company uses its own arm-like robot, which is equipped with a camera that recognizes and cuts only ripe red tomatoes. The harvested crops are transported by an automatic guided vehicle, just like in its automotive component factory.
Denso believes it can leverage its strengths, including process control and high quality requirements, as well as automation technology acquired in auto parts manufacturing, to improve farming efficiency.
Toyoda Gosei, which manufactures interior materials for cars, will add a wide range of new businesses to its bylaws, including sporting goods, healthcare equipment and energy-related equipment. Among the new referenced activities, the equipment manufacturer intends to take advantage of its handling know-how.
Its product “e-Rubber” – a material that contracts like a muscle when an electric current is applied to it – is an example that has potential for use in sports or health. The company has begun supplying samples of the new material to Japanese sports equipment maker Mizuno for use in shoe soles that can detect minute weight changes associated with movement.
Among other vendors expanding their operational portfolios, Toyota Boshoku, a maker of vehicle seats, will add agricultural operations using biotechnology, while Tokai Rika, which manages car switches, will include restaurant and daycare management.
Behind the desire of OEMs to diversify their income is the transformation of the automotive industry: the transition to electric vehicles will significantly reduce the number of parts needed, as engines and other components requiring complex machining will no longer be necessary.
As manufacturers also make progress in producing parts for greener vehicles, there is a strong sense of urgency among companies looking to apply their existing technologies and accumulated expertise in the auto parts business to other industries. .
Another reason behind the series of amendments between these companies seems to be the reorganization of the Tokyo Stock Exchange. Recently, there have been many cases where companies have had to explain their future business activities to the public following market restructuring.
“In several cases, companies have decided to include this information in their articles of association if they are inclined to do so as a new company,” said Seiji Sugiura, an analyst at Tokai Tokyo Research Institute. However, “whether the new ventures will pay off immediately is another question,” he added.