Denso expands into software-based solutions

Japan-based Denso corporation, one of the largest mobility suppliers in the world, has made one of the largest shifts in business strategy in its 70-year history. It has expanded into software-based solutions in addition to its hardware expertise that push the company beyond a vehicle-centric focus in order to help create a new mobility paradigm for society.

Denso recently released its 2018 annual report, which is the first account of company activities following the release of its long-term policy. The policy and report reiterate Denso's strategy to achieve vision, including increasing performance in the fields of electrification and automated driving, realigning organisational structure to accelerate business execution, R&D, collaboration, and other efficiencies and focusing on key initiatives both in and outside the auto industry to add value.

Koji Arima, CEO of Denso, said, "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. 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."

The company claims that it 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 7 trillion yen (US$62B/Rs 455,517 crore) and an operating profit ratio of 10 percent by 2026.

In 2017, Denso announced plans to invest US$1 billion (Rs 7,344 crore) by 2020 in its Maryville, Tennessee location. The investment significantly advanced the United States' role in driving the future of electrification and safety technology and made Maryville, according to the company, 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.

Restructuring in a time of disruption
Denso says it has undergone restructuring with the aim of accelerating business execution during major industry change. Specific examples include 
- Strengthened business in China with plans to establish a China division to enhance strategy-making capability.
- Reorganised product groups to support Denso's focus on key fields and initiatives; new business groups include: Thermal systems, Powertrain systems, Mobility systems, Electrification systems and Electronic systems
- Arranging satellite R&D facilities globally, which are able to react speedily in a rapidly changing business environment and execute advanced R&D faster
- Formed alliances and partnerships to help advance Denso's R&D function. Recent partnerships span areas such as AI, autonomous driving, cybersecurity, electrification and agricultural technologies and include Toshiba, Plug & Play, NRI SecureTechnologies, Dellfer, Aisin Seiki, ASAI Nursery, InfiniteKey, JOLED and the University of Michigan, to name a few.

Denso plans to focus on global megatrends like electrification, automated driving and connected cars. Denso has more than 220 subsidiaries in 35 countries and regions (including Japan) and employs approximately 170,000 people worldwide. Consolidated global sales for the fiscal year ending March 31, 2018, totaled US$48.1 billion (Rs 353,270 crore). Last fiscal year, Denso spent 8.8 percent of its global consolidated sales on research and development.