April 21, 2016 / 3:07 PM / in a year

Denso sees Toyota's Daihatsu buy out as chance to broaden parts supply

The logo of Toyota is pictured at at the 37th Bangkok International Motor Show in Bangkok, Thailand, March 22, 2016. Picture taken March 22, 2016.Chaiwat Subprasom

KARIYA, Japan (Reuters) - Denso Corp (6902.T) said a full buy out by Toyota Motor Corp (7203.T) of its mini-vehicle unit Daihatsu Motor Co 7262.T was a chance for Japan's largest auto supplier to expand its product portfolio by making more parts for smaller vehicles.

Toyota is in the process of making Daihatsu a fully owned division to strengthen its push into compact cars for emerging markets. Denso is Toyota's largest supplier, and counts the automaker group as its biggest customer.

In an interview with Reuters, Denso President and CEO Koji Arima said the buy out may result in the development of smaller cars with more specialized features, or an increase in Daihatsu branded vehicles which utilize Toyota technology.

"If this is the case, there could be opportunities for us to increase the range of parts we supply to both companies," Arima said in the interview conducted last week at the company's headquarters in central Japan.

"For example, there could be an chance for us to develop parts for both mini-vehicles and compact cars. This would be a way for use to raise volumes and lower development costs."

In past years, Daihatsu, which makes smaller, lower-priced vehicles than Toyota largely for Japanese and Asian markets, has been sourcing more lower-cost parts from non-Toyota group suppliers to bring down its costs.

Reporting by Naomi Tajitsu, editing by David Evans

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