Toyota’s CEO will step down as CEO of the company his grandfather founded on Thursday, handing over to the head of its Lexus luxury brand as the Japanese conglomerate struggles to meet the transition to electric vehicles.
Koji Sato, the 53-year-old chief branding officer and president of Toyota Motor Corp’s Lexus brand, will take over as chairman on April 1 when Akio Toyoda retires.
The question of who will lead Toyota, Japan’s largest company and one of the world’s most influential manufacturers, has become increasingly important to investors. However, the timing of the announcement was unexpected.
Under Toyoda, 66, who has led the company for more than a decade, the automaker has appeared hesitant to embrace electric vehicles, arguing that the hybrid technology it pioneered with its once-dominant Prius is a better fit for many drivers.
It also promoted hydrogen-powered cars as the future, raising concerns that it would be left behind by the rise of electric vehicles, as the flashier and more agile Tesla Inc outperformed it in terms of both innovation and share price.
This insistence on hybrids and hydrogen drew fire from investors and environmentalists who had previously lauded Toyota’s technology and emissions record.
“No doubt Mr. Toyoda has been a competent CEO, but the whole auto sector needs to make disruptive change and Toyota has been lagging in this in our view, so this could be chance for a fresh start,” said Anders Schelde, chief investment officer of Danish pension fund AkademikerPension, which has repeatedly pressed Toyota to accelerate its shift to electric vehicles.
“We are hopeful this could help Toyota to set a new direction, but it remains to be seen.”
The succession announcement was webcast via the automaker’s Toyota Times channel, and it resembled a stilted talk show with a host rather than a formal corporate announcement.
“The timing of this was a surprise,” said Seiji Sugiura, an analyst at Tokai Tokyo Research Institute, who noted there may have been a “sense of stagnation” inside the company given recent pressure on the share price.
“Probably, the day-to-day management will not change. Having Akio Toyoda step away from being CEO may increase his symbolism within the company and it may be hard for the young, new president to really show his hand.”
There was also little discussion of future corporate strategy or investment priorities. Toyoda stated that Sato’s mission would be to transform Toyota into a “mobility company,” without elaborating.
“The CEO needs youth, energy, strength,” Toyoda said, saying that he himself was now a “relic” of an older generation. In Sato, too, he said, he had chosen a fellow car aficionado.
Toyoda described the leadership hand-off as a “baton touch,” but the staged event highlighted his continued central role. He turned from time to time to give Sato instructions and reminders.
Sato stated that Toyoda offered him the CEO position at the end of the year while both were in Thailand for an event commemorating Toyota’s 60th anniversary of operations.
“I didn’t know how to respond,” Sato recalled. “I thought it was a joke.”
One Toyota executive, who did not want to be identified, predicted that the automaker would enter a period of “cloistered rule,” referring to the period in Japanese history when a retired emperor continued to rule.
Toyoda presided over the carmaker for more than a decade, during a period of intense change in the industry and rising uncertainty about how legacy automakers can fend off the challenge from newer challengers such as Tesla.
Toyoda said at a news conference that his tenure at Toyota began in 2009 with “crisis after crisis,” referring to the effects of a global recession, Toyota’s recalls and safety crisis, and the disruptions caused by the 2011 earthquake and tsunami in northern Japan.
At a shareholder meeting in June last year, Toyoda said he was “thinking about timing and the selection of a successor” when asked about his future.
Sato was chosen, he said on Thursday, because he “worked hard” to learn Toyota’s philosophy.
Sato began his career at Toyota in 1992 and rose through the ranks to become the chief engineer of Lexus International, the company’s luxury auto brand, in 2016, according to his profile on the company’s website.
Since 2020, he has served as the president of Lexus International and Gazoo Racing Company, Toyota’s motorsport brand. He also joined Toyota as an executive, becoming its chief branding officer in January 2021.
Toyota director Philip Craven said in a video statement that the board had reviewed and approved the succession plan proposed by Toyoda and the outgoing chairman, Takeshi Uchiyamada.
(Adapted from Business-Standard.com)
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