TOKYO — Denso Corp.'s big new r&d headquarters here is a declaration that the megasupplier intends to become a global force in the emerging technology of autonomous vehicles.
But Denso's new push — involving plans to invest more than $3 billion through 2020 and more than quadruple its advanced engineering staff — signals something equally profound in the world auto business: Japan's mighty keiretsu system is reasserting itself.
Keiretsu, the decades- old system of financially connected suppliers and customers, is often dismissed by critics as an inefficient throwback to a day when Japan's automakers struggled to compete globally. But in a new era in which vast scale is key to competitiveness, Toyota Motor Corp. is suddenly finding familiar potential in its colossal kingdom of loyal and affiliated suppliers.
Denso, for its part, has abruptly emerged as the lynchpin in a whole host of new joint ventures. The enterprises bring together Toyota, its wider supplier network, and even other Japanese automakers as they confront an industry thrown into upheaval by autonomous driving, electrification and connectivity. When size suddenly matters, the old keiretsu counts.
As Toyota Motor's top supplier, Denso is a global giant by almost any measure, with almost $41 billion in 2017 sales and ranked No. 2 on Automotive News' list of the top 100 global suppliers. It is 24 percent owned by Toyota.
But even Denso sees itself as a latecomer to the self-driving car race. Yet by leveraging Toyota's keiretsu and recruiting new startups to the ranks, executives hope Denso can quickly leapfrog to the head of the pack — not only in autonomous driving but in a gamut of futuristic fields that require colossal investment and newfangled expertise foreign to legacy automakers and suppliers alike.
"The keiretsu suppliers, if they successfully join forces, can be a mighty weapon," said Tatsuo Yoshida, senior auto analyst at Sawakami Asset Management in Tokyo.