Mitsubishi Electric now aims to spin off its automotive-equipment business in order to improve operational efficiency and restructure the business portfolio for greater profitability

Mitsubishi Electric (TOKYO: 6503) announced that it has decided to drastically restructure its automotive-equipment business in accordance with a resolution adopted at the company’s Executive Officers’ Meeting. The restructure is designed to streamline decisionmaking in the business and accelerate the transformation of the company’s automotive-equipment business in the face of rapid changes in this industry, including the shift to connected, autonomous, shared & service, and electric (CASE). Under the plan, Mitsubishi Electric now aims to spin off its automotive-equipment business in order to improve operational efficiency and restructure the business portfolio for greater profitability.

Last year, Mitsubishi Electric introduced a new Business Area structure to strengthen the company’s business portfolio by reorganizing it into business areas that have the delegated authority needed to act with speed and efficiency.

As a first major step in CASE-related businesses, including electrification and advanced driver-assistance systems (ADAS), which have promising market potential and will require very high levels of investment, Mitsubishi Electric is seeking to collaborate with excellent partners that offer technological synergies. Focusing strategically on these fields and leveraging Mitsubishi Electric’s cutting-edge technologies is expected to put the automotive-equipment business on a stronger growth trajectory

Second, in fields where Mitsubishi Electric has competitive advantages, such as electric power-steering system products, strategies will focus on cost reduction and efficiency enhancement, reviewing business terms with customers, including to accelerate price shifting, and reallocating resources to the most profitable projects and models.

Third, Mitsubishi Electric plans to promptly discontinue problematic automotive-equipment businesses, such as car multimedia, in light of the anticipated difficulty in improving profitability, as well as other factors, in these businesses.

Details of the structural reforms and their specific effects will be disclosed as soon as they are finalized. The spinoff will take the form of a company split, but the specific method and other details have not yet been finalized. The exact timing also has not been determined, but the goal is to establish a new automotiveequipment company within one year. Information on these matters will be disclosed as soon as final determinations are made. Mitsubishi Electric expects the spinoff to have only a minor impact on its consolidated financial results.