Mitsubishi Electric is reportedly exploring a sale of its automotive electronics and components business, a move signaling a major pivot away from the sector. The potential divestiture could reshape the global auto tech supply chain and trigger consolidation among suppliers.
- Mitsubishi Electric’s automotive business generated ¥280 billion ($1.8B) in revenue in FY2024
- EBIT margin for the automotive unit dropped to 4.3% in 2024, below the company’s 8% target
- Potential sale valuation between ¥400B–500B ($2.6B–3.3B)
- Mitsubishi Electric is shifting focus to industrial automation and semiconductors
- Peers Denso, Hitachi Astemo, and private equity are potential buyers
- MEL stock rose 3.7% on news, while AVTO and TSLA saw slight declines
Mitsubishi Electric is in advanced discussions to divest its automotive business, a key segment that generated approximately ¥280 billion ($1.8 billion) in revenue in fiscal year 2024. The unit, which supplies electronic control units, sensors, and powertrain components to major OEMs including Toyota and Nissan, has faced declining margins due to intense competition and rising R&D costs in electrification and ADAS technologies. The decision comes as the company refocuses on its core industrial automation and semiconductor businesses, where it reported a 12% year-over-year increase in operating profit. Analysts note that the automotive division’s EBIT margin has dipped to 4.3% in 2024, below the company’s 8% target, making it a likely candidate for divestiture. Potential buyers include automotive suppliers such as Denso Corp, Hitachi Astemo, and private equity firms with interests in industrial tech. The sale could value the business between ¥400 billion and ¥500 billion ($2.6–3.3 billion), reflecting a significant premium to its book value. If completed, the transaction would mark one of the largest asset sales in Japan’s industrial sector this year. Market reaction has been immediate: MEL’s stock rose 3.7% in early trading, while peers like AVTO and TSLA saw modest dips as investors reassessed supply chain risks. The move may accelerate consolidation in the automotive electronics space, with smaller suppliers potentially seeking acquisition or partnership opportunities.