Eaton Corp. is weighing a sale or spinoff of its vehicle unit, valued at roughly $5 billion, according to people familiar with the matter. The move aligns with new CEO Craig Arnold's strategy to streamline the portfolio toward higher-growth sectors like electrical equipment and energy management. The unit supplies components for commercial vehicles and heavy machinery.

For investors, this marks a pivotal shift for the industrial conglomerate, which has faced pressure to improve returns. Divesting the slower-growing vehicle business could free up capital for acquisitions or debt reduction. The unit, formed through Eaton's 2012 acquisition of Cooper Industries, has been a steady but modest performer in a competitive market.

Market analysts will watch for deal value and buyer interest, which could come from private equity or strategic industrial firms. A successful transaction would sharpen Eaton's focus on its core power management and aerospace segments. The company's board is expected to review formal proposals in the coming months as part of its ongoing portfolio review.