Denso : Integrated Report 2024

Integrated Report 2024

For the year ended March 31, 2024

DENSO Integrated Report 2024

DENSO Integrated Report 2024

DENSO Creed

In 1956, seven years after the founding of NIPPONDENSO, we formulated the DENSO Creed for the purpose of protecting, nurturing, and passing on to the next generation the mentality of all DENSO employees-which we possessed even before splitting from Toyota Motor Co., Ltd.-while taking the next step toward new progress based on a clear self-awareness.

 Without changing the values encapsulated in the DENSO Creed, we formulated the DENSO Philosophy in 1994 to reflect the social changes occurring at the time and to better clarify the meaning of the DENSO Creed in words that were more appropriate for the time. In addition, to share our value system with DENSO employees on a global basis as the number of Group companies and local employees began to dramatically increase, we established the DENSO Spirit in 2004.

 The four ideals of the DENSO Creed, which have served as the source of the Company's progress to date, have been gradually passed down through the years and are still embraced today by our approximately 160,000 employees across the globe.

Publication of DENSO Integrated Report 2024

DENSO publishes an integrated report every year in order to foster a deeper understanding among investors and all of its stakeholders regarding the Company's initiatives toward sustainable corporate value enhancement.

 With a focus on the corporate philosophy that has remained unchanged since the Company's founding, DENSO Integrated Report 2024 includes specific information on the strategies and initiatives DENSO is pursuing toward "green" and "peace of mind" with the aim of realizing its Long-term Policy for 2030, as well as measures to strengthen financial and non-financial capital that underpin these strategies and initiatives, and the unique competitiveness generated from the interaction of these capitals. We hope that this report demonstrates to readers the fact that DENSO is a company that maintains a consistent set of beliefs, from the past to the present and into the future, and that continues to grow alongside society while creating new value.  Going forward, DENSO will continue its efforts to disclose accurate information to its stakeholders in a timely manner and actively engage in dialogue with them. We would like to ask for the candid opinions and requests of our stakeholders regarding this report so that it may serve as a more effective communication tool that facilitates the co-creation of corporate value and mutual understanding between stakeholders and DENSO.  Lastly, I would like to assure the readers that the creation process for this report was done in an appropriate fashion.

Yasushi Matsui

Executive Vice

President

Representative

Member of the Board

Chief Financial Officer

DENSO Creed

Be trustworthy and responsible.

Cherish modesty, sincerity, and cooperation.

Be pioneering, innovative, and creative.

Provide quality products and services.

DENSO Philosophy

Contributing to a better world by creating value together with

Editorial Policy

In addition to providing financial information, such as results

and sales overviews as well as management strategy, DENSO Integrated Report 2024 is edited as an integrated report

that reports, in an easily understood manner, on what value DENSO is providing society and on the process of improving that corporate value. This we achieved by introducing, in an integrated manner, information of a non-financial nature on

intangible assets, including on the environment, society and governance (ESG), that are seen as the foundation underpinning growth.

 In compiling this report, references have been made to the Integrated Reporting Framework that is proposed by the International Financial Reporting Standards (IFRS) Foundation, the Guidance for Integrated Corporate Disclosure and

Company-Investor Dialogue for Collaborative Value Creation, formulated by the Ministry of Economy, Trade and Industry, and the Governance Guidelines on Intellectual Capital and Intangible Assets, formulated by Japan's Cabinet Office. In addition, with regard to environmental and social reporting, detailed information is available in the "Sustainability" section of the Company's website.

Scope of Report	DENSO CORPORATION and the DENSO Group (In this
Target Organization
	report, DENSO CORPORATION refers to DENSO on a
	non-consolidated basis.)
Reporting Period	This report covers the activities of the DENSO Group
	during fiscal 2024 (April 1, 2023 to March 31, 2024).
	Certain parts of this report include content on the
	Group's activities from April 2024 onward.
Target Audience	All stakeholders involved with the DENSO Group

Cautionary Note: Forward-Looking Statements

Of the content published in this report, what is not historical fact comprises future predictions based on expectations or on plans for the future. As they include contributory factors, such as risks and uncertain elements, the possibility exists that actual achievements and results may differ materially from this report.

a vision for the future

DENSO Spirit

A spirit of foresight, credibility and collaboration

Terminology Used in DENSO Integrated Report 2024		About the Cover of DENSO Integrated Report 2024
ICE: Internal combustion engine		The cover of this report uses DENSO original design element "D-Cross" as a
EV: Electric vehicle		slanted line to express the Company's direction into the future. "DENSO Red"
BEV: Battery electric vehicle		signifies the passion of its employees in solving issues with innovative technolo-
HEV: Hybrid electric vehicle		gies, and "Crafting Blue" signifies its manufacturing capabilities in creating new
PHEV: Plug-in hybrid electric vehicle		value ahead of the times. The combination of these two colors is an expression
FCEV: Fuel-cell electric vehicle		of the new value being created along with society for a brighter future while
CASE vehicles: Connected, autonomous, shared & service, and electric vehicles		delivering happiness to people.
The QR Code® is a registered trademark of DENSO WAVE INCORPORATED.
Positioning of Integrated Report

The DENSO Spirit expresses values and beliefs shared by our employees around the world

that we have cultivated since our establishment in 1949. The DENSO Spirit is an action guideline that provides

the driving force for contributing to the mobility society and the lifestyles of people

as well as the source of our competitiveness.

Foresight	Credibility	Collaboration
Providing surprises and impressions	Providing quality and reliability	Achieving the highest results
in a way that only DENSO can	beyond customer expectations	by working as a team
Vision	Quality First	Communication
Creativity	On-site Verification	Teamwork
Challenge	Kaizen, Continuous	Human Development
	Improvement

Financial Information

DENSO Website

Investors

https://www.denso.com/global/en/about-us/

investors/

Financial Results / Securities Report, etc.

Non-Financial Information

Integrated Report (PDF)

DENSO Website

Sustainability

https://www.denso.com/global/en/ about-us/investors/annual-report/

https://www.denso.com/global/en/about-us/

sustainability/

Initiatives toward Environmental Reporting /

Initiatives toward Social Responsibility Reporting /

Corporate Governance, etc.

DENSO Corporate Website

https://www.denso.com/global/en/

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DENSO Integrated Report 2024

CONTENTS

DENSO Integrated Report 2024

Topics of DENSO Integrated Report 2024

• At a Glance

• Management Message

Shinnosuke Hayashi

CEO

• 6 Message from the President & CEO
• 11 Message from the Chief Quality Officer

12 DENSO's Value Creation Story

12	Past, Present, and Future
14	History of Innovation and Creation
18	DENSO's Value Creation Process

52 Human Capital

Message from the Chief Human Resources Officer

Yasuhiko Yamazaki

CHRO

• 57 Manufacturing Capital
• 59 Message from the Chief Monozukuri Officer
• 60 Intellectual Capital
• 64 Message from the Chief Technology Officer
• 65 Message from the Chief Software Officer
• 66 Message from the Chief Digital Officer
• 68 Natural Capital
• 70 Efforts to Maximize the Value of "Green" (TCFD)
• 74 Social and Relationship Capital

Themes of DENSO Integrated Report 2024 DENSO Integrated Report 2024 clearly conveys a story about DENSO's approach to creating new value and solving constantly changing social issues, anchored in its philosophy that has supported DENSO's creation of value to date and will continue to do so in the future. The report features recent initiatives and progress toward achieving the targets of the Mid-term Policy for 2025, including business and capital strategies aimed at realizing DENSO's overall strategies, as well as corporate governance, which underpins the Company's corporate activities, all within the context of its value creation story.

 Additionally, the report has been designed to facilitate an understanding of how DENSO continues to grow alongside society through a cycle of value propositions to society through its business activities. This includes an explanation of the relationship between financial and non-financial capital, our efforts to enhance each type of capital, and our unique competitive advantages created through the synergy of these capitals with our global workforce of approximately 160,000 employees and other stakeholders.

Utilization of Dialogue and Feedback Received

We actively engage in dialogue with our stakeholders using our integrated reports. The opinions we receive from stakeholders are used to increase the sophistication of management and reflected in information disclosures and opportunities for further dialogue. Also, we view our employees as important stakeholders and therefore are working to enhance each employee's awareness of corporate value by making use of our integrated reports.

Highlighted Content

■ P.24-25 Our Accumulated Capitals

In addition to explaining our efforts to strengthen each form of capital through appropriate inputs, we clearly articulate the outputs and outcomes from the combination of these capitals. This provides an overview of DENSO's business model that achieves business growth while addressing social issues.

■ P.50-51 Dialogue with an Analyst

In a dialogue format between external experts and our CFO, we discuss the December 2023 public offering of DENSO stock, which attracted significant interest from investors and other stakeholders, as well as the reduction of cross-shareholdings within the Toyota Group. This discussion touches upon our aims for enhancing capital efficiency and the impact on the Japanese stock market.

■ P.80-81Contribution Fields and Mainstay Products We have compiled a comprehensive overview of the products and services offered by each business segment and clearly explain how each product contributes to the realization of our green and peace of mind principles, along with their unique characteristics and areas of contribu- tion. Additionally, we highlight how DENSO has consistently refined its technology over time to address the social issues of each era, using the evolution of key products as illustrative examples.

■ P.94-95 Special Feature: Value Creation in Action

This special feature introduces DENSO's new initiatives to realize a hydrogen society by commercializing the production and utilization of hydro- gen, which has drawn attention as a source of clean energy with less impact on the environment.

20	Our Cultivated Strengths
24	Our Accumulated Capitals
26	Tradition of Sustainability Management

28 Growth Strategy

28	Road Map for Our 2030 Vision
30	Awareness of Business Environment

78 Overview by Product

78 Business Portfolio and Value Creation
80	Contribution Fields and Mainstay Products
82	Electrification Systems
84	Powertrain Systems
86	Thermal Systems

Overall Layout of DENSO Integrated Report 2024

This integrated report is edited based on the layout explained in the chart below. This layout is used to better explain DENSO's value creation story.

The aim of DENSO Integrated Report 2024 is to have the reader gain a deep understanding of DENSO's value creation process while promoting an opportunity for dialogue. Throughout the entirety of this booklet, we have created a story line that comprehensively communicates our value creation process while encompassing crucial elements that help the reader understand this process (management philosophy, strategy, governance, etc.) and while referencing the Guidance for Collaborative Value Creation. The chart below shows the logical layout of these crucial elements based on the story line we have created. Additionally, we have listed keywords affiliated with each element so that readers can easily access the information they wish to know.

32		Materiality
34		Mid-term Policy for 2025
37		Strategies for Green and Peace of Mind

42 Capital Strategies

42 Financial Capital

88	Mobility Electronics
90	Advanced Devices
92 Factory Automation and Social Solutions
93	Food Value Chain
94	Special Feature: Value Creation in Action

96 Corporate Governance

Values

The DENSO Creed and Philosophy are our universal way of thinking that will forever remain unchanged. In addition, sustainability management is an ideology that we have passed down since our inception and serves as the core of our management approach.

Medium- to Long-term

Strategies

Centered on DENSO's universal way of thinking and value systems, we have established a value creation process to ensure that we continue to grow together with society. In addition, we have formulated the Long- term Policy for 2030 based on the business environment of each era.

Strategies for Business		Results and Important		Corporate Governance
Execution		Indicators for Results
To realize the targets in our		The capitals that we have		We have put in place a gover-
current Long-term Policy for		accumulated since our found-		nance framework that allows
2030, we have formulated		ing serve as a growth founda-		us to steadily execute strate-
material issues (Materiality)		tion that underpins our		gies and continuously
that DENSO must prioritize.		corporate activities. By		improve our corporate value.
Also, as a pathway to reach-		implementing strategies led
ing our Long-term Policy for		by businesses that leverage
2030, we have formulated		these capitals, we aim to
the Mid-term Policy for 2025		both realize business growth
and strategies for green and		and resolve social issues.
peace of mind.

43 Message from the Chief Financial Officer

Yasushi Matsui

CFO

• 50 Dialogue with an Analyst

• 96 Corporate Governance

1. Dialogue with the Outside Board Members

1. Risk Management

1. Compliance

114 Corporate Data

1. Facts & Figures

1. 10-YearData

1. Company Overview and Stock Information
2. TCFD Index

DENSO Creed and Philosophy		Value Creation Process		Materiality		Capital Strategies		Corporate Governance
Sustainability Management		Awareness of Business		Mid-term Policy for 2025		Business Strategies
	Environment
		Long-term Policy for 2030		Strategies for Green and		KPIs for Sustainability
			Peace of Mind

Meaningful Dialogue and Engagement

In addition to holding dialogue with our external stakeholders, we promote the internal utilization of our integrated reports

to boost the motivation of our roughly 160,000 global employees toward corporate value creation.

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DENSO Integrated Report 2024

At a Glance

Guided by the DENSO Creed, we are a company that earnestly tackles social issues head on and continues to create value through outstanding technologies and quality, centered on DENSO Culture. Our roughly 160,000 global employees each depict their own vision for the happiness of people and society as a whole and take on challenges each day to create new value.

DENSO Integrated Report 2024

DENSO's Vision for the Future

By leveraging our unwavering competitiveness in the "mobility domain" as a starting point, we create new value for society, while taking a broad view of society as a whole, through the implementation across various industries of our superior technologies and demonstrated quality gained through the development of products for automobiles.

Founding

1949

In 1949, the Company was founded as NIPPONDENSO with the aim of becoming Japan's leading manufacturer of automotive components.

DENSO by the Numbers

As of March 31, 2024

Total Number of

Group Companies

193 (including

DENSO CORPORATION)

The DENSO Group has a total of 193 Group companies, with research laboratories, production bases, and sales offices spanning across the globe.

Total Number of

Global Employees

162,029

All of our employees around the world work in unison to deliver outstanding products backed by exceptional quality and advanced technology.

Energy

We envision a future where nature and humanity coexist harmoniously through the utilization of clean energy.

Agriculture and Food (AgTech)

We aim for a future where everyone, everywhere, can always have safe and secure access to food-the foundation of people's daily lives.

Consolidated Revenue ¥7.1trillion

In fiscal 2024, consolidated revenue reached a record high of ¥7.1 trillion.

R&D Investment ¥550.9billion

We are accelerating technological development centered on the fields of electrification, advanced safety, and automated driving.

Automotive Products (Global)

No. 2

We are a global company that provides products and systems that are trusted by car manufacturers around the world.

Green

Factory Automation (FA)

We strive for a future where robots and humans collaborate to achieve higher levels of productivity while conserving energy- ensuring the sustainable development of industries without worrying about labor shortages or workplace accidents.

Peace of

mind

Revenue

by Product

Revenue

by Customer

Composition of Revenue

As of March 31, 2024

■ Mobility Electronics	Development and manufacturing of advanced driver assistance systems (ADAS),	27.2%
in-vehicle ECUs for electronically controlling vehicles, and other products to achieve
	the safe and comfortable transportation of drivers
■ Thermal Systems	Development and manufacturing of car air-conditioning systems, radiators,	24.2%
condensers, and other cooling products for creating comfortable vehicle interiors
■ Powertrain Systems	Development and manufacturing of ignition, air intake and exhaust, valve train,	21.3%
and other products for internal combustion engine vehicles, such as gasoline or
	diesel cars
■ Electrification Systems	Development and manufacturing of drive components for electric vehicles, power	17.4%
supply systems that control batteries, and other products
■ Advanced Devices	Development and manufacturing of semiconductors, in-vehicle sensors, and other	5.9%
products installed in inverters and in-vehicle ECUs
■ Non-automotive businesses	Development, manufacturing, and sale of products related to productivity	2.0%
improvement in plants, products related to non-automotive businesses, including
	agriculture, and other products
■ Other		2.0%
■ Toyota Group (Toyota Motor Corporation, Daihatsu Motor Co., Ltd., Hino Motors, Ltd.)	52.1%
■ Honda Motor Co., Ltd.		6.8%
■ Stellantis N.V. (FCA, PSA)		3.8%
■ SUBARU CORPORATION		3.3%
■ Ford Motor Company		2.9%
■ General Motors Company		2.4%

Electrification

We see a carbon-neutral future where people and goods move about efficiently without harming the environment.

Advanced Driver Assistance

Systems and Autonomous

Driving (ADAS & AD)

We envision a future with no fatalities from traffic accidents, where traffic incidents are significantly reduced, and everyone can travel comfortably and safely to their desired destinations.

■ Other car manufacturers	19.6%
■ Aftermarket and non-automotive	9.1%

Centered on our expertise in mobility,

we aim to extend the technologies we have developed to various industries and greater society,

creating a future filled with smiles and happiness.

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DENSO Integrated Report 2024

MANAGEMENT MESSAGE

Message from the President & CEO

DENSO's Corporate Management Centered on

Its Purpose as a Company

Aiming to Resolve Social Issues

While Ensuring the Well-Being and Growth of People

Shinnosuke Hayashi

President & CEO

Representative Member of the Board

DENSO Integrated Report 2024

MANAGEMENT MESSAGE

Importance of Returning to Our Purpose as a Company-Our Universal Starting Point One year has passed since I was appointed as president.

Taking the baton of management that has been passed down continuously since DENSO's founding in 1949, I feel a sense of gratitude every day for the predecessors who built the DENSO of today, for the employees who currently support DENSO, and for all of our stakeholders. I would like to offer you my deepest appreciation.

 Now, in my second year as president, I feel it is truly important for us to return to our universal starting point, which is our purpose as a company, and shift the gears of management accordingly.

 We currently find ourselves in an era of significant change. The automotive industry has entered a transitional period through the emergence of CASE*1 vehicles, and in this period, we are seeing the further progression of vehicle electrification and the introduction of more intelligent vehicles such as SDVs.*2 Furthermore, greater advancements are being made with semiconductor and software technologies. As a result, vehicles are becoming more connected with society and are starting to offer new kinds of value. Also, looking at society at large, the world itself has become more connected due to advanced communication technologies, and the evolution of generative AI on a global scale is reshaping how we live and work.

 In these times of change, it is important to actively anticipate change with a sense of urgency. While we will of course take steps to do so, we must also remember not to lose sight of our original purpose as a company by becoming too preoccupied with trying to keep pace with change and limiting ourselves to short-term targets. When that happens, we run the risk of becoming disoriented, losing our perspective, and we stagnate as a company. Even amid this period of constant change, we need to adopt our purpose and mission as a company as an unshakable core, based on which we will conduct consistent management practices for all of our corporate activities, including drafting management strategies and business policies and building a corporate culture.

 Empowered by our purpose and mission, we are set to resolve social issues through the principles of green and peace of mind.

 Since its establishment, DENSO has confronted social issues caused by vehicles head on, including air pollution from

exhaust gas and traffic accidents. By continuing to develop new products that address such issues, we have contributed extensively to the automotive industry. Branching out from the mechanics domain, which we have engaged in since our founding, we have expanded into new domains such as electronics and software while honing the strengths we possess in each domain. By maintaining an optimal balance between our operations in each domain, we have bolstered our system development capabilities.

 We will steadily lead the way with the evolution of mobility through the use of these system development capabilities, combining a broad range of technologies in a sophisticated manner. At the same time, we will help advance systems that connect vehicles with society at large. By doing so, we will tackle complex social issues moving forward, including the realization of a carbon-neutral society and a circular economy as well as the elimination of traffic accident fatalities. Moreover, drawing on the technologies we cultivated in the mobility domain, we will expand into new areas such as energy, factory automation (FA), and food and agriculture (AgTech), thereby making even greater contributions to the resolution of social issues from the perspectives of green and peace of mind.

*1 CASE: A new trend in the automotive industry involving connected, auton- omous, shared, and electric vehicles

*2 SDVs (Software-defined vehicles): Vehicles manufactured with greater value and functionality through the use of software

Three Bold Initiatives to Create

a Brighter Future Based on Mobility

By resolving social issues centered on green and peace of mind, we will create a brighter future based on mobility. I will now explain the three bold initiatives that we will pursue to that end.

 The first initiative is evolving mobility. No matter how greatly we expand our business domains, mobility and vehicles remain a vital domain to which we should contribute. As such, we will pursue the realization of our management philosophy of green and peace of mind through this domain.

 Regarding our perspective on green, we are striving to promote the widespread adoption of EVs with a view toward achieving carbon neutrality. While the expansion of the BEV market seems to have slowed down, we believe the transition to electrification will remain a vital part of the major trend for reducing environmental burden over the medium to long term,

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DENSO Integrated Report 2024

MANAGEMENT MESSAGE

DENSO Integrated Report 2024

MANAGEMENT MESSAGE

and, therefore, we are steadily pursuing the electrification of vehicles. Meanwhile, as the situation with energy and related infrastructure differs by country and region, it is important that our transition to EVs focuses closely on market and customer needs. DENSO's customers comprise automakers from around the world, and this is precisely why we will enhance our lineups for systems, components, and parts for each customer layer so that we can meet a wide range of electrification needs. At the same time, to meet the market needs in each region, which vary due to each region's respective situation with energy, we will work closely with automakers and business partners to offer a diverse range of options across the industry, thereby contributing to the realization of a carbon-neutral society.

 With regard to peace of mind, we are working to popularize advanced driver assistance systems (ADAS) with the aim of eliminating traffic accident fatalities. Each country and region has its own traffic infrastructure and rules. To that end, in addition to enhancing the performance of safety technologies, we will offer a broad range of products tailored to the specific circumstances of each country and region, from simple and affordable components to ADAS equipped with state-of-the- art technologies such as AI and sensor technology. By doing so, we will commit ourselves to protecting as many lives as possible from traffic accidents as we work to realize a society where everyone can enjoy the benefits of safe and secure mobility.

 The second initiative is creating new value. Guided by our management philosophy of green and peace of mind, we are pursuing technological development and commercialization in many other domains outside of mobility, including energy, factory automation (FA), and food and agriculture (AgTech).

 For example, in the energy domain, we are working to commercialize hydrogen-based energy with the aim of achieving a carbon-neutral society. To that extent, we will launch energy systems driven by SOECs*3 on the market that create hydrogen from electricity. Water electrolysis-a key technology for these systems-makes use of many of the elemental technologies that DENSO has cultivated through its experience with vehi- cles, including air, heat, and electricity management as well as know-how on the creation of ceramic catalysts.

 By bringing together DENSO's mobility technologies, we will work with our business partners to realize a hydrogen-based society that both preserves the global environment and enriches people's lives.

 Furthermore, in the FA domain, we will leverage robot and IoT technologies to provide support for the advancement of Monozukuri based on considerations for green and safety.

Additionally, in the food and agriculture (AgTech) domain, we will pursue efforts toward industrialized farming with the aim of realizing eco-friendly agriculture and stable food production.

 The third initiative is strengthening fundamental technolo- gies, centered on semiconductors and software. The role that semiconductors play in mobility is rapidly increasing following the progress of vehicle electrification and automated driving. DENSO has sharpened its competitive edge through over 50 years of dedicated R&D activities for semiconductors as well as 40 years of experience in the development of in-vehicle software. Looking ahead, we will further accelerate R&D activities for semiconductors and software, which are core technologies for the mobility domain and domains for new value creation, thereby strengthening our fundamental technologies.  Although the semiconductor shortages across industries that occurred in the wake of the COVID-19 pandemic are still fresh in our minds, we must realize a stable supply of high- performance semiconductors at a low cost if we are to achieve genuine business growth and value creation. To that end, we will accelerate semiconductor development while strengthening domestic and international partnerships and establishing collaborative models, thereby solidifying the industry's foundation for a stable semiconductor supply.

 In the same manner as semiconductors, software is also becoming more important in the mobility domain. We are entering the era of SDVs, where the performance of a vehicle can be enhanced simply through a software update. In this era, software development is becoming more large scale and com- plex. In addition, as long as vehicles are responsible for protecting the lives of their passengers, absolutely no compromises can be made in terms of quality and reliability. Throughout our 40 years in software development, we have honed the ability to realize systems that integrate software, electronics, and mechanics; accumulated know-how on ensuring the safety of the entire vehicle at all times; and strengthened our co- creation capabilities with various development partners. I am confident that these strengths will provide us with an unrivaled competitive edge in the SDV era, in which software development is becoming dramatically more challenging.

 We will also seek to standardize software across the automotive industry. The value of mobility will increase tremendously through the use of software. For this to happen, however, a significant amount of investment is required throughout the entire industry. To push forward with the utilization of software to enhance value, we must thoroughly identify the areas of competition and collaboration within software development. With regard to collaboration, actively working toward standardization across the industry and boosting efficiency will be essential. We have a history of collaborative development with many automakers and a strong track record in business. From such a position, we will seek to be a driving force behind vehicle software standardization and unification, thereby working to enhance industry-wide value.

 Moreover, securing talented personnel in the rapidly growing software domain has become a pressing issue. Particularly in Japan, we continue to face intense competition in securing such talent. While building an optimized development structure on a global basis, we will provide reskilling opportunities to our hardware engineers, who have a thorough knowledge of vehicles. By doing so, we will transition them into software engineers, enabling them to play an active role in broader domains. As we transform our business portfolio, we expect changes to occur in terms of the balance of our internal per- sonnel. We will therefore promote talent management to ensure that all of our employees can continue to play an active role with a high level of motivation well into the future.

*3 SOECs: Solid oxide electrolysis cells

Continuing to Enhance Corporate Value in Order to Resolve Social Issues

To realize our management philosophy of green and peace of mind and enhance corporate value in a sustainable manner, we are committed to achieving our financial target for ROE of 10% or higher by fiscal 2026 and are steadily advancing efforts to improve our profit structure accordingly.

 With implementation of ROIC-minded management, our aim is not to improve near-term indicators but rather to enhance corporate value over the medium to long term. We have carefully communicated the significance of this aim to members of management and all employees, and this has helped them engage in efforts to make improvements on their own initia- tive. Also, to balance sustainable social value creation with business growth, we have been working to reshuffle our business portfolio. In these efforts, each year we evaluate businesses on whether they align with our efforts to realize the management philosophy of green and peace of mind and assess their growth potential and profitability. Based on this assessment, which considers both financial and non-financial perspectives, we work to drive the growth of core businesses while downsizing or withdrawing from mature ones.

 To respond to recent changes in the operating environment, including the rising costs of materials and higher wage levels, we have made appropriate adjustments to our transaction prices through earnest engagement with our suppliers, thorough explanations to our customers, and impact assessments of the supply chain. Additionally, we have been working to encourage price adjustments and bolster competitiveness across the industry by engaging with relevant organizations such as the Japan Auto Parts Industries Association.

 We have also been working to reform the assets we pos- sess. In 2023, we significantly reduced cross-shareholdings, including shares held in each Toyota Group company. Rather than being satisfied with the status quo, we carefully assess the changing times and engage in logical decision-making and business execution. This unique approach is also reflected in our process for optimizing our financial capital. Looking ahead, we will continue to reduce cross-shareholdings in an appropriate manner. At the same time, we will strive to enhance asset efficiency through the reduction of cash on hand and the optimization of inventories.

 Through these kinds of efforts to reshuffle our business portfolio and reduce low-profit assets, we achieved record- high revenue of ¥7,144.7 billion in fiscal 2024 and have generated a total of ¥1.7 trillion in cash flows from operating

activities over the three-year period from fiscal 2021 to fiscal 2023. In the upcoming three-year period starting from fiscal 2024, we will further accelerate these initiatives with the aim of generating over ¥3.0 trillion in cash flows from operating activities. The cash we generate will be allocated to growth investments and shareholder returns. In terms of growth investments, we will pick up the pace of M&As and business alliances in key growth domains highlighted by the aforementioned three bold initiatives. By fiscal 2031, we aim to achieve net sales of ¥7.5 trillion and an operating margin and ROE of around 12%.

 For our shareholders, who understand and support our business activities, we will continue to offer long-term, stable returns with a focus on dividend on equity (DOE). In fiscal 2024, not only did we improve DOE for the third consecutive year, we also carried out our largest-ever share buyback, totaling ¥200.0 billion. In the current market environment, there is growing pressure on Japanese companies to improve price-to- book ratio (PBR). For many years, we have pursued management with a keen awareness of capital costs, and since 2020, we have consistently maintained a PBR level that exceeds the minimum benchmark of 1.0 times. Moving forward, we will steadily advance efforts aimed at creating value that we can offer society and promote genuine dialogue with members of society, starting with our shareholders and other investors, who understand and support our initiatives with the aim of further growth. Through such efforts, we will strive to achieve appropriate increases in our share price.

 Our purpose and mission of resolving social issues through the principles of green and peace of mind is not something we can accomplish as just one company. As the competitive landscape becomes more complex, we will promote industry restructuring through selection and concentration initiatives aimed at medium- to long-termindustry-wide growth. At the same time, we will collaborate with a diverse range of partners who share our aspirations, transcending industry boundaries to pursue structural reforms within the industry to ensure continued growth into the future. Rather than focusing solely on the growth of our own business, we believe it is our responsibility to aim for the advancement of the entire indus- try. This approach will help us maintain and evolve logical systems that facilitate social progress within a capitalist market economy. To that end, we will first transform ourselves by enhancing capital efficiency and improving corporate value. While doing so, we will commit ourselves to creating an environment that enables us to advance efforts toward realizing a brighter future for the entire industry.

Pursuing a Corporate Culture That Sets in Motion a Cycle for Resolving Social Issues While Ensuring the Well-Beingand Growth of People Our people are the driving force that realize the many pursuits that I have discussed so far.

 Shifts in the social environment have transformed the role and value of our people, making their importance to our management increasingly significant. As information becomes more borderless and homogenized, and the competitive capabilities of regions and companies become more evenly matched, the abilities of the people who execute strategies are becoming as important as the strategies themselves. Furthermore, as society becomes more mature, we are

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DENSO Integrated Report 2024

MANAGEMENT MESSAGE

DENSO Integrated Report 2024

MANAGEMENT MESSAGE

Message from the Chief Quality Officer

Reviving "The DENSO of Safety and Quality":

entering into an era in which people are placing greater value on job satisfaction and a sense of purpose as they shape their own careers. In this era, companies are viewed as a place where people can realize their desired careers. Also, innovative

leaders of each workplace. Moving forward, we will strive to further enhance these initiatives while establishing better linkages between them so that they can generate synergies more organically. Fostering a corporate culture is the essence of my

Addressing the Fuel Pump Recall Issue

technologies such as generative AI continue to advance. Under such circumstances, an important management issue is to define the role of people and workstyles based on the significance of work itself and on what makes people happy. Against this backdrop, we will seek to build a corporate culture where each employee engages in their work based on intrinsic actions, feels a sense of fulfillment while doing so, and ultimately achieves growth. Through such a culture, we will enhance the capabilities of our employees.

 Intrinsic action-or simply put, motivation-differs from person to person. For example, there are various factors that motivate people. Some people want to hone their own skills while doing valuable work for the future. Some want to value the feeling they receive from the smiles and gratitude of their co-workers and offer that same feeling to others. Other people want to do all that they can to contribute to the country or region in which they were born and support their fami- lies. With all the diverse factors that motivate employees, it is important to ensure that their motivations align with the aims that we wish to achieve as a company. To that end, we aim to create an environment that ensures that DENSO's purpose and mission of "resolving social issues through the principles of green and peace of mind" resonates with each employee and that motivates them to achieve said purpose and mission. We also aim to foster a fulfilling work environment that values the motivation and intrinsic actions of all employees and encourages them to take on challenges. I believe it is essential that we create a corporate culture that sets in motion a cycle where the purpose of DENSO resonates with the motivation of employees and drives them to fulfill the purpose.

 In 2017, we formulated the Long-term Policy for 2030, which adopts the slogan of "Bringing hope for the future for our planet, society, and all people" through initiatives toward green and peace of mind. Since then, we have been promoting our business activities in accordance with this policy. The policy has been shared in such an extensive manner that we are confident that it is well-known among all employees. On the other hand, I would have to say that we are only about "halfway there" in terms of thoroughly entrenching our management philosophy from the members of management down to the frontline personnel and in terms of engaging in dia- logue, decision-making, and actions with a consistent focus on achieving our purpose and mission.

 In order to deeply embed DENSO's purpose and mission within the Company and ensure they serve as guiding principles for each employee's awareness and actions as part of our corporate culture, we need to unify our management philoso- phy, strategies, and corporate culture. This requires integrating hard measures, such as systems and frameworks, with soft measures, such as open dialogue between management and employees.

 To date, we have rolled out a broad range of initiatives toward this aim, including implementing the engagement survey and establishing KPIs for improving employee satisfac- tion, conducting training to support the career plans of employees, and holding Conversations with Our President and Vice Presidents, where management speaks directly with

role as president. To that end, I will dedicate even more time and energy than ever before to continue to pursue the fostering of an ideal corporate culture as my most important mission.

Closing: Showing Our Determination to Forge a New Path toward the Future

Even though we have been making efforts to resolve social issues and offer new value, we would like to offer our sincerest apologies for the distress and trouble caused by the series of recalls of DENSO fuel pumps that have been issued by various automakers since March 2020. Since our founding, we have declared our company motto as "Safety and Quality First" and have continued to pass down this ideal from generation to generation. Despite this ideal, a major quality-related issue occurred. I take the occurrence of this issue extremely seriously and reflect upon it deeply. We would like to once again commit ourselves to the notion that quality is the lifeline of management. As president, I will lead the way with Groupwide efforts to restore trust, ensuring that we all work together, step by step and side by side, in pursuit of this goal.  In 2024, DENSO celebrated its 75th anniversary. In reaching this milestone, I would like for us to return to the spirit of our founding as we seek to enhance our corporate culture and forge a new path toward the future. Guided by this ambition, I will push ahead with our endeavors together with all

160,000-plus DENSO Group employees. I would like to ask our stakeholders for their continued support as we strive to do so.

September 2024

Shinnosuke Hayashi

President & CEO

Representative Member of the Board

We would like to express our sincerest apologies for the distress and inconvenience caused by the series of recalls of our fuel pumps that have been filed by a number of automakers since March 2020.  As an automotive parts supplier, we understand that our products are important functional parts playing a crucial role in automobiles, to which people entrust their lives, and should operate flawlessly, as even a single malfunction in our products can cause a significant burden to our cus- tomers. With this understanding, we have pursued business activities that put quality at the center of our management. Since the establishment of the Company, we have adopted the company motto of "The DENSO of Safety and Quality" and have continued to pass down this spirit from generation to generation. Despite that, the largest-everquality-related issue in our history occurred in 2020, and we deeply regret the concerns and inconvenience that this has caused for a large number of automobile users and automakers.

The fuel pumps were recalled because of the possibility that they could become inoperative in a worst-case scenario, due to possible deformation of the impeller* (one of the components of the fuel pump) with a lower resin density.

 Reflecting on this experience from a quality control perspective, this was a

specific quality issue that was caused by specific factors in the manufacturing process of the recalled fuel pumps, where there were complicated interactions between several factors that had never happened before. This issue could not be foreseen with the available technical knowledge at that time, and it took a considerable amount of time to finally identify the root causes.

 Subsequently, we have completed technical analysis to identify the root causes and implemented technical countermea- sures. We are now making every effort on a Companywide basis to produce and supply replacement parts, in collaboration with relevant suppliers, to ensure that such parts are delivered to all of our customers at the earliest date possible.

• Impeller: A component of the axial fan designed to send fuel outward

To ensure the highest possible quality in the products we deliver worldwide, we take all conceivable precautions and maintain strict daily management in our production process. These include stringent gate management in the development process, quality verification and comprehensive inspections before mass production, and thorough on-site management during the mass production process.

 Meanwhile, as a Monozukuri (manufac- turing) company, we have continued our operations through technological advancement and contributed to the resolution of social issues while achieving growth in a sustainable manner. Taking on new challenges is indispensable to achieving technological advancement. While pursuing such challenges on an ongoing basis, we strive every day to make improvements so that we can deliver high-quality products that satisfy our customers.

 In making these improvements, we mobilized the entire Company to launch the "Reborn21" plan so that we could reflect back on our starting point of "Quality First" to further improve quality. Under this plan, we are making ongoing efforts to enhance awareness, accumulate knowledge, and foster culture, which are all crucial elements of quality assurance.

 Regarding awareness, we have been thoroughly entrenching a "customer first" level of awareness. To build unshakable trust-based relationships with customers, we will demonstrate our customer-first approach through the leadership of the

management team, including the president, and division heads.

 As for knowledge, we have been steadily accumulating fundamental quality-related technologies for our current needs and for the future in an effort to shore up our foundation for quality. Looking ahead, we understand there will be many changes in the operating environment that will impact quality, including rapid software advance- ments, advanced driver assistance systems (ADAS), carbon neutrality, and the circular economy.

 With culture, we value efforts to foster a corporate culture in which all employees participate and that revolves around the honest exchange of opinions between supervisors and employees so that both parties can understand the real issues at hand and work to tackle them together. Under such a culture, we will strive to promote further collaboration together with labor unions. (Human Capital P. 52-56 )  Underpinned by this awareness, knowl- edge, and culture, we have established a Safety and Quality Headquarters, independent from and placed directly under the Company, through which we are striving to enhance quality governance. With the urgent need to strengthen safety and quality countermeasures, we placed a senior director in charge of fundamental quality- related technologies in 2020, who promotes activities aimed at building such technologies on a cross-organizational basis. Additionally, I, as an executive vice president, was given the title of chief quality officer (CQO) in 2022, being placed in charge of promoting quality-related activities from a Companywide perspective.

Reflecting deeply on the first words appearing in the DENSO Creed, "Be trustworthy and responsible," we will seek to deliver safety and peace of mind to our customers. At the same time, we will make Companywide efforts aimed at meeting global expectations by anticipating future changes and applying proper work practices with a firm awareness of quality as the foundation underpinning our corporate activities and with a sense of integrity as a Monozukuri company. We ask for your continued support as we pursue these endeavors moving forward.

Yasuhiko Yamazaki

Executive Vice President Chief Quality Officer

10

11

DENSO Integrated Report 2024	DENSO Integrated Report 2024
DENSO's Value Creation Story	DENSO's Value Creation Story

Past, Present, and Future

DENSO's innovations start from a focus on the future and what makes people happy. Our mission is to resolve social issues from the perspective of sustainability. Based on this mission, we have continued to realize growth while leading changes in the mobility domain to increase our areas of contribution and repeatedly pursuing innovations and new creations. During this 75-year journey, we have cultivated strengths and capital that will continue to be the source of our value creation well into the future by boldly transforming our business portfolio. To ensure that we can leverage these strengths and be an essential company a century from now, we will increase our areas of contribution further still.

Revenue

Fiscal 1951 to fiscal 1978 show non-consolidated

revenue, while fiscal 1979 and thereafter show

consolidated revenue. In addition, from fiscal 2014,

the financial statements have been prepared based on

International Financial Reporting Standards (IFRS).

(Japanese accounting standards were employed up to

and including fiscal 2013.)

Our

Cultivated

Strengths

P. 20-23

Market capitalization*

* Before adjustment for treasury stock

Our

Accumulated

Capitals

P. 24-25

1950949

19610

19710

1981980

19910

20010

20110

2020

20243 (FY)

History of Creating Value to Address Social Issues and Ambitious Initiatives for the Coming Era

	1950s		1960s and 1970s		1980s
	Postwar Reconstruction and			Popularization of Private Cars and			Increasingly Severe
	Motorization			Emergence of Social Issues			Environmental and Safety Issues
	Taking on the challenge of resolving social				Taking measures ahead of exhaust gas				Accelerating the commercialization of
issues using cutting-edge technologies from		regulations and laying foundations for			safety systems for preventing
the time of our founding		"peace of mind" products			traffic accidents causing fatalities
• Developed the DENSO-GO electric vehicle		• Developed exhaust gas-controlling products compli-			• Gradually realized the practical application of safety
• Developed Japan's first car and bus air-conditioning			ant with the world's strictest regulations			systems, including airbag sensing systems
	systems		• Began development of semiconductors in anticipa-			• Commenced the mass production of vacuum sen-
					tion of the coming era			sors, which represented the world's first in-vehicle
									semiconductor sensor

1990s and 2000s

Global Warming and Spread of Digital and

Information Technologies

Contributing to eco-friendly lifestyles with core technologies

• Developed the QR Code®, which increases efficiency at manufacturing sites
• Developed the world's first electronic control-type common rail system
• Developed the world's first inverter with dual-side cooling

2010s

ICT Advancement and

SDG Adoption

Entering into a once-in-a-century paradigm shift

• Developed Global Safety Package, the first genera- tion of our advanced safety system
• Began providing services in the agriculture and fac- tory automation fields, moving beyond the frame- work of mobility

2020s

Escalation of

Social Issues

Aiming to provide new value in the domains of green and peace of mind

• Developed Global Safety Package 3, the third gener- ation of our advanced safety system
• Developed our first inverter to use SiC power semiconductors
• Commenced verification test for the widespread utilization of hydrogen

Four Ideals of the DENSO Creed	Tradition of Sustainability Management
Established at the time of the Company's founding, the DENSO Creed sets forth a clear commitment to pursuing innovation	The DENSO Creed calls on us to "provide quality products and services," expressing the essence of our approach to sustain-
in anticipation of changing times and to addressing social issues through quality products and services. This commitment is	ability management, which focuses on benefiting society by utilizing businesses to pursue ambitious initiatives that address
also the starting point of our sustainability management, which we are currently implementing.	social issues. Today, our mission is to continue our legacy by putting into practice the commitment that our predecessors
			established when drafting the creed and by passing on this commitment to the next generation.
Be trustworthy and responsible.		Be pioneering, innovative, and creative.	In advancing sustainability management, DENSO has incorporated future social issues into its Long-term Policy for 2030
The trust that our predecessors worked earnestly to build over		By consistently leading the times with our research and creativ-	and as an integral part of its material issues (Materiality), and the Company is addressing these social issues through business
	activities. Centered on our management philosophy of green and peace of mind, we are taking on the challenge of resolving
the years underpins the DENSO of today. We will therefore		ity and continuing to refine our technologies and know-how, we
maintain this trust and seek to build it up further so that we can		will swiftly create new value that truly benefits society, thereby	complex social issues. By doing so, we will provide society with new value that inspires diverse stakeholders.
pass it on to the next generation. By doing so, we will meet the		paving a new way forward.
expectations of society and fulfill our responsibility to ensure
DENSO's future.		Provide quality products and services.				In December 2021, we established the "Heritage Center" with the aim of
			Establishment of
		We will earnestly approach each issue facing this ever-changing			enabling all employees to return to DENSO's origins, which are repre-
Cherish modesty, sincerity, and cooperation.		society and continue to bring hope and happiness to all people			the DENSO Heritage	sented by the DENSO Creed and the principles of quality and safety, and
			Center	to provide them with an opportunity to consider what unique aspect of
We work to refine not our appearance or job title but the		while aiming to provide our customers and society with products				DENSO that they themselves want to pass on to the next generation. At
essence of who we are as a part of DENSO, and we work in col-		and services of the very best quality.		the DENSO Heritage Center, we have established permanent exhibits that introduce the Company's his-
laboration to perform our duties with sincerity. The sincere and				tory since its founding and showcase events that have occurred pertaining to quality and safety. We also
cooperative relationships we have with each other as employees				feature various special exhibits. In the two years since the Heritage Center's establishment, more than
will bring forth inspiration and help us build long-lasting relation-				7,500 DENSO employees from Japan and overseas have visited the location, using it as a foundation to
			implement sustainability management on an individual basis.
ships with our customers and business partners.
	12	13

Team in Charge of Electrical Equipment Development

At the time, a team of approximately 30 engineers and technicians devoted them- selves to the in-housedevelopment of electrical equipment, often going without sleeping and eating.

DENSO Integrated Report 2024

DENSO's Value Creation Story

DENSO Integrated Report 2024

DENSO's Value Creation Story

History of Innovation and Creation

Just as it did when DENSO was founded, the commitment set out in the DENSO Creed is our starting point to this day. Amid a rapidly changing external operating environment, we must boldly take on unprecedented challenges, such as promoting initiatives toward CASE* and realizing carbon neutrality. Taking the baton that was passed to us by our predecessors, who consistently took on the challenge of resolving the social issues of the times, we will steadily move forward toward our aim of bringing happiness to people and society as a whole.

* CASE: Connected, autonomous, shared & service, and electric

1930s to 1950s: Taking on the challenge of resolving social issues using cutting-edge technologies from the time of our founding

1960s and 1970s

Preparing to address social issues by cementing the foundations of global competitiveness and by advancing strategic initiatives for the age of electronics

	Popularization of Private Cars during the Period of Rapid
External
Economic Growth Together with the Emergence of Traffic
Environment
Accidents, Air Pollution, and Numerous Other Social Problems
Social	High-Mix,Variable-Volume Production Capabilities and
Needs	Development of Environmental and Safety Technologies

1980s

Commercializing environmental and safety products ahead of the times and strengthening software capabilities

External	Globalization, Trade Friction, and Increasingly Severe
Environment	Environmental and Safety Issues
Social	Overseas Production and Higher-Performance Vehicles
Needs

External	Postwar Reconstruction and Motorization
Environment
Social	International Standards of Technology and Quality
Needs

1935: Taking on the Challenge of Producing Electrical Equipment In-House

An automobile department was established within Toyoda Automatic Loom Works, Ltd. (currently Toyota Industries Corporation). In 1935, the executive director of Toyoda Automatic Loom Works, Kiichiro Toyoda, instructed Ryuichi Suzuki (who would later become a member of the Board at DENSO) to take on the challenge of producing electrical equipment in-house. However, developing such equipment proved

challenging due to the unreliable quality of electrical equipment at the time. In fact, Mr. Toyoda stated to Mr. Suzuki that this task seemed to be far harder than he had imagined, and he asked Mr. Suzuki whether they should quit at that juncture. Mr. Suzuki pleaded to Mr. Toyoda to allow him to continue his efforts for one more month in order to realize in-house production. Sometime after doing so, the enthusiasm and persistence of Mr. Suzuki and the young engineers on his team led to the official adoption of electrical equip-

1949: Birth of NIPPONDENSO With the Japanese economy in an extremely difficult state due to the promotion of the Dodge Line by

the General Headquarters of the Supreme Commander for the Allied Powers, the electrical equipment department split off from Toyota

Motor Co., Ltd., and was established as NIPPONDENSO CO., LTD. The company's first president, Torao Hayashi, aimed to rapidly expand the company not just in Japan but also overseas. For that reason, he expressed the company's determination to become independent by choosing the name NIPPONDENSO ("Nippon" meaning Japan), rather than KARIYADENSO, AICHIDENSO, or TOKAIDENSO, which are names of the local area where the company was founded.

1953: Start of Technical Cooperation with Robert Bosch GmbH

In the early 1950s, a technological gap clearly existed between NIPPONDENSO and Western com- panies. Consequently, we urgently needed to achieve world-class technologies and quality. At this junc- ture, we encountered

German-based company Robert Bosch GmbH, which was an order of magnitude larger than us. Thanks to the mediation of

Dr. Tokushichi Mishima, who was the inventor of MKM steel, and the determination of our management, we concluded a technical alliance with Robert Bosch. By learning from our new partner, we estab-

Specific Initiatives

• Received the Deming Prize, the most prestigious award for quality control
• Established the IC Research Center in 1968 in anticipation of a shift to the electronic control of automotive components; began developing semiconductors; and manufactured the automotive industry's first semi- conductors. Accumulated a large amount of knowledge on semiconduc- tor and IC specifications by conducting thorough analysis

Electronic fuel injection system
Received the Deming Prize

Specific Initiatives

• Established manufacturing companies and technical centers overseas to realize regionally optimized product development, manufacture, and supply capabilities
• Helped address pollution, global warming, and other environmental issues by acting as a trailblazer in the creation of eco-friendly products
• Launched a project for the practical application of robots. Furthermore, the development of such technologies as barcode readers and RFID,* which we pursued in a similar manner as we did with robots, helped establish the foundation of our current factory automation (FA) business.

• RFID (radio frequency identification): A non-contact system that reads data from RF tags using electromagnetic waves

DENSO (MALAYSIA) SDN. BHD. at the In-vehicle test in Europe time of its establishment in 1980

ment in Toyoda vehicles.

lished the foundations of internationally competitive technologies and quality.

Green Value and Peace of Mind Value Provided

Green Value and Peace of Mind Value Provided

Specific Initiatives

• Beginning in the 1950s, we catered to the needs of customers, especially Toyota Motor Corporation. At the same time, we established and grew a busi- ness field centered on mechanical parts and realized the provision of products supported by internationally competitive technologies and quality.

Green Value and Peace of Mind Value Provided

• Developed and mass-produced the DENSO-GO electric vehicle in 1950, when it was difficult to obtain gasoline. Many of DENSO-GO's electronic components were designed and manufactured in-house, and approximately 50 of these vehicles were sold.

• Developed Japan's first car and bus air-conditioning systems. Although there was a concern that such systems would impede driving performance, these systems were able to overcome that notion and quickly grew in popularity due to their high level of convenience and comfort.

DENSO-GO

• Achieved the practical application of electronic fuel injection systems ahead of regulations on exhaust gas. After doing so, we continued to develop products that respond to environmental regulations, one after the other.
• Participated in the Comprehensive Automobile Traffic Control System (CACS) project initiated by the Ministry of International Trade and Industry (currently the Ministry of Economy, Trade and Industry). This project would later help us develop car navigation systems and con- nected driving products.
  "Safe DENSO," the Origin of Our Accident Prevention Training
  In 1969, an explosion accident occurred at the die-casting factory of the Anjo Plant in which six employees lost their lives, making it the biggest disaster at DENSO since its founding. In October of the same year in the wake of the incident, we created the new "Safe DENSO" slogan to redouble our resolve to ensure that another such accident would never happen again. Additionally, to ensure that we would never forget this accident and always remain aware of safety, we established September 8, the date the disaster occurred, as "Safety Day." We are also currently rolling out special safety training activities on a global basis.

• Developed the world's first electronic control-type diesel pumps, which impressed the world with their ability to control exhaust gas, reduce fuel consumption, and realize high output
• Commenced the mass production of vacuum sensors, which repre- sented the world's first in-vehicle semiconductor sensor. With this technology, we led the way ahead of other companies by equipping semiconductors with sensors and thereby adding value.
• Gradually realized the practical application of safety systems, includ- ing antilock brake systems, airbag sensing systems, and forward colli- sion warning systems, leveraging the research that we had been conducting since the 1960s
• Opened the Nukata Testing Center, a one million square meter test course comparable in scale to those of auto manu- facturers. Through this center, we continued to advance our testing facilities on a daily
  basis to ensure product perfor- A natural environment test course mance and quality that exceed that can replicate driving condi-
  customer expectations. tions at night or in the rain

Green  Peace of mind	14	15

DENSO Integrated Report 2024

DENSO's Value Creation Story

DENSO Integrated Report 2024

DENSO's Value Creation Story

1990s

Honing our expertise in the creation of comfortable, convenient vehicles and boldly taking on new fields

External	Collapse of the Bubble Economy and Acceleration of
Environment	International Debate on Global Warming
Social	Compact, Fuel-Efficient Vehicles and
Needs	Environmentally Friendly Lifestyles

2000s

Utilizing electronics and software technologies to promote the introduction of electric vehicles and popularize safety products

	Spread of Digital and Information Technologies and
External
Creation of International Frameworks and Regulations for
Environment
Global Warming Prevention
Social	Diversification of Powertrain Technologies and
Introduction of Products for Hybrid Electric Vehicles (HEVs)
Needs
and Other Electric Vehicles

2010s to 2020s

Tackling a once-in-a-century period of change

by maximizing value in the domains of

green and peace of mind

External	ICT Advancement and SDG Adoption, and Escalation
Environment	of Social Issues
Social	Conversion to CASE Vehicles / Contribution to the Resolution
Needs	of Social Issues through Our Business

2030s and Beyond

Aiming for excellence in the domains of

green and peace of mind

External	Global Warming, Resource Shortages, and Escalation
Environment	of Such Social Issues as an Aging Society
Social	Recycling-Based Society Centered on Renewable Energy
Needs

Specific Initiatives

• Established the Fundamental Research Center (currently the Advanced Research and Innovation Center), which has created a large number of innovative technologies that have led to the development of world-first and world-best products
• Commenced Excellent Factory (EF) activities. We began to expand activ- ities on a global basis to improve our factories, led by personnel on the front lines of production. These EF activities represent the origins of DENSO's activities focused on quality improvements.
• Utilized core technologies to develop products that contributed to eco- friendly lifestyles

Specific Initiatives

• Established DENSO Training Academy Thailand, our first overseas regional training center. This center helped us build a structure for edu- cating engineers and technicians on a global basis.
• Formulated Eco Vision 2005 environmental management policy. Leveraged outstanding environmental technologies to accelerate the reduction of CO2 emissions from business activities
• Marketed products for CASE vehicles to promote the introduction of electric vehicles and the popularization of safety products

Specific Initiatives

• Established technical centers in seven regions across the globe. Through these centers, we have set up a structure to create competitive prod- ucts that can promptly meet diversifying local needs.
• Established the Electrification Innovation Center (EIC), which promotes efforts to strengthen the development and production of products powered by electricity, and Global R&D Tokyo-Haneda, which conducts the development of automated driving and other technologies. By doing so, we have accelerated our R&D activities in the domains of green and peace of mind.
• Developed high-performance advanced safety systems and improved the safety performance of existing vehicles through the provision of retrofitted products

Specific Initiatives

• Declared intention to realize 100% carbon-neutral Monozukuri and elim- inate traffic accident fatalities by fiscal 2036. Worked to expand busi- nesses and resolve social issues in line with management philosophy of green and peace of mind
• Commenced verification tests for the use of hydrogen, a form of clean energy that does not burden the environment, thereby accelerating efforts to realize a hydrogen-based society

Green Value and Peace of Mind Value Provided

• Focused on the development of car air-conditioning systems that use natural refrigerant to curb the destruction of the ozone layer caused by conventional refrigerant
• Developed the world's first electronic con- trol-type common rail system. Pioneered the way with common rail systems that would later dominate the market
• Developed the world's first iridium spark plug using an iridium alloy center elec- trode, making for an ultra-fine electrode that also extends product lifespan
• Commercialized household heat pump water supply systems that contribute to
  energy savingsIridium spark plug

• Developed the QR Code® with large capacity and high-speed

readability that is compatible with high-mix,low-volume production

Green Value and Peace of Mind Value Provided

• Developed the world's first inverter with dual-side cooling. DENSO's technological capabilities, which help meet the needs for high output and compact sizes, were acknowledged through the development of these inverters, leading to a rapid increase in their production volume.

Structure for cooling both sides of the inverter

Green Value and Peace of Mind Value Provided

• Developed motor generators adopting a proprietary winding struc- ture. These motor generators realize highly efficient, eco-friendly power generation and driving.
• Saw cumulative production of inverters, which are our mainstay prod- uct in the environment field, reach 20 million units worldwide in 2021
• Developed our first inverter to use silicon carbide (SiC) semiconduc- tors. These inverters help improve the energy efficiency and extend the driving distance of BEVs.

Our Vision for the Future: Long-term Policy for 2030

Green	Peace of
	Mind

at plants

QR Code®

• Developed the world's first plant-derived resin (castor oil tree) radiator tank, serving as an eco-friendly product that helps reduce CO2 emis- sions throughout the product life cycle
• Developed "Night View," the world's first nighttime driving
  support system with a pedestrian detection function that uses near infrared rays
• Developed the world's first forward-looking radar sensor using milli- meter waves. Able to operate even in rainy and foggy environments, these sensors helped enhance the safety of automobiles.

Inspiring

Inverter production site

• Developed Profarm T-cube, an environmental control device for agri- cultural greenhouses, with the aim of supporting agriculture in Japan and avoiding future food crises
• Developed Global Safety Package, an advanced safety system using a monocular camera and millimeter-wave radar sensor
• Developed Global Safety Package 3, which helps improve safety per- formance by recognizing the environment surrounding the vehicle

Green  Peace of mind	16	17