Denso and powertrain supplier Aisan have reached a basic agreement, following a directors' meeting today (20 May) to begin studying increasing Denso's stake in Aisan, and also transferring part of Denso's powertrain business to Aisan.
"This initiative would help strengthen the companies' competitiveness in powertrain and future growth areas," Denso said in a statement.
"The auto industry is facing a once-in-a-century paradigm shift.
"Although there are growing global expectations for electrified vehicles, it remains important to reduce the CO2 emissions and increase the fuel efficiency of conventional internal combustion engines."
Under the basic agreement, Denso and Aisan would integrate similar operations in the powertrain businesses of the two companies to improve competitiveness.
Limited resources would be shifted to new growth areas to strengthen cooperation and contribute to future mobility.
The two companies would start studying the possibility of transferring the entire business of developing, manufacturing, and selling some products such as fuel pump modules in Denso's powertrain business to Aisan.
Powertrain products would continue to be developed and manufactured while increasing production efficiency and cutting costs.
The two companies will also start studying the possibility of Denso's acquisition of all Aisan shares owned by Toyota Motor. The increased stake would strengthen cooperation to improve competitiveness in future growth areas.
The pair hope to conclude an official agreement in autumn 2019.
The business transfer and stake increase would require approval from competition law authorities in respective countries and regions.