Denso may sell some ICE-related operations to Niterra

Toyota affiliate Denso Corp. said it has signed a memorandum of understanding to negotiate a transfer of certain internal combustion engine-related businesses to fellow Japanese auto supplier Niterra Co.

If negotiations go to plan, Denso said it will transfer business operations for its spark plug and exhaust gas sensor products to Niterra. The transfer would have to be approved by competition law authorities in all countries and regions concerned, and the two companies are still negotiating a purchase price.

Transferring some internal combustion engine operations will allow the two companies to combine technologies and manufacturing capabilities to improve ICE products. Meanwhile, Denso hopes to accelerate the development of electric vehicle products, according to a release.

Niterra, formerly NGK Spark Plug, "expects the continued demand for internal combustion engines parts. The entire industry requires responses corresponding to short, medium, and long-term stages. Consequently, the Company has reached a basic agreement to start discussions and considerations for the acquisition, to consider how to sustain the supply of internal combustion engines parts," according to a statement from the company.

Both companies have operations in North America, but it is not yet clear how the transfer will affect those operations.

Denso ranks No. 2 on the Automotive News list of the top 100 global suppliers with estimated worldwide sales to automakers of $47.9 billion in 2022, with about $11.26 billion of that in North America.

Niterra ranks No. 80 on that same list, with estimated worldwide sales to automakers of $2.7 billion in 2022 — with about $676 million in North America, according to Automotive News data.