Toyota Motor Corp. elevated Lexus President Koji Sato to chief executive officer, replacing the long-serving Akio Toyoda as the the world’s No. 1 carmaker navigates the auto industry’s once-in-a-generation shift toward electrification and greater automation.
(Bloomberg) — Toyota Motor Corp. elevated Lexus President Koji Sato to chief executive officer, replacing the long-serving Akio Toyoda as the the world’s No. 1 carmaker navigates the auto industry’s once-in-a-generation shift toward electrification and greater automation.
Toyoda, grandson of the Japanese car giant’s founder, becomes chairman effective April 1, the company said in a statement Thursday. He became CEO more than a decade ago and oversaw Toyota’s rise to become the world’s bigger maker of cars.
“To advance change at Toyota, I have reached the decision that it is best for me to support a new president while I become chairman,” Toyoda said during an online briefing.
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Sato, 53, takes on leadership of Toyota at a watershed moment. The carmaker is facing criticism for its reluctance to plow headlong into electric vehicles, instead spreading its bets across various technologies such as battery-based EVs, hybrid technology, hydrogen-powered cars and traditional combustion vehicles.
Sato, a mechanical engineer by training, joined Toyota in April 1992 after graduating from Waseda University.
In early 2016, he was appointed chief engineer of Lexus International Co., and in April the following year, ascended to chief of Toyota’s luxury arm. In September 2020, Sato was also appointed president of Gazoo Racing, Toyota’s motorsport and performance road car brand. He was appointed chief branding officer at Toyota in January 2021.
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Sato’s appointment, and Toyoda making way, sends a clear message, according to Mitsushige Akino, an analyst at Ichiyoshi Asset Management Co.
“The social and economic environment has become more volatile, and by becoming chairman, Akio Toyoda will be able to take a broader view of management,” he said. “Stronger management will be good for Toyota. By appointing Sato, who isn’t a senior officer, as CEO, the message is that younger people should take over.”
Carmakers from Volkswagen AG to Ford Motor Co. are pivoting swiftly away from combustion engine-powered cars in favor of new, cleaner lineups, with many betting on electrification as the way forward.
While Toyota is spending ¥4 trillion ($31 billion) to roll out 30 EV models by 2030, Toyoda earned a reputation as a contrarian on the future of the industry, saying he doubts consumers are ready for a wholesale shift at the pace some are projecting. That approach has been questioned by some, who see it as risking Toyota’s long-term position as the world’s dominant automaker. Others, however, see it as a prescient longer-term bet.
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Toyota surpassed VW in 2020 to become the world’s top-selling automaker and widened the gap further in 2021. VW had led global production for five years prior to that, until the German automaker’s sales in Europe slumped to their lowest point in decades, allowing Toyota to wrest the coveted throne as it navigated restrictive pandemic policies, supply chain issues and component shortages.
Toyota is expected to announce 2022 full-year sales later this month.
The step back Toyoda is making isn’t unprecedented. At 66, he will be moving into the chairman’s role at around the same age as past CEOs of the carmaker, which tends to follow historical precedent. Katsuaki Watanabe ceded the role at 67. Before him, Fujio Cho left the position at 68, and Hiroshi Okuda at 66.
“The leadership shuffle was a surprise, but the decision to pass the torch to a younger leader is commendable,” said Tatsuo Yoshida, a senior analyst at Bloomberg Intelligence. “Toyoda’s choice to remain as chairman will help maintain the company’s business strategy and continuity.”
Takeshi Uchiyamada, the current chairman, will step down.
Toyoda is the second-longest tenured head of a major auto company, according to data compiled by Bloomberg. He took the reins at Toyota in 2009, shortly after Elon Musk assumed his post at Tesla Inc. Since he took over in June of that year, Toyota shares have more than doubled, giving the company a market valuation of $238 billion.
A graduate of Keio University in Tokyo in 1979, Toyoda joined the family business in 1984 and became a board member in 2000, according to the company’s website.
He held general manager positions in Asia, the Middle East and Australia before being appointed as president, a time the automaker was on the edge of a recall that would impact millions of vehicles and the company was bleeding money.
In the years since, Toyota’s profits steadily recovered, and then ballooned, despite periods of intense disruption ranging from an earthquake and tsunami that upended Japan’s automobile production in 2011, to the Covid pandemic.
Toyoda also led forays into new arenas, forging partnerships with Panasonic Holdings Corp. and Softbank Group Corp. in batteries and self-driving cars. He also pushed Toyota’s investment in Tesla and committed 4 trillion yen of spending on its fleet of electrified vehicles. Toyoda’s son Daisuke Toyoda, was often flagged as next in line after his father’s immediate successor. He’s currently a senior vice president at Woven Planet Holdings Inc., Toyota’s advanced technology arm led by roboticist James Kuffner.
During Toyota’s annual shareholders’ meeting in June, Toyoda alluded to steps the company was taking to find and develop potential successors. Anyone following in his footsteps must have “unshakable conviction on why Toyota exists” and a firm understanding of the company’s philosophy, he said, adding that his goal will be to “rejuvenate” management with the move.
–With assistance from Grace Huang, Craig Trudell, Nicholas Takahashi and Kanoko Matsuyama.
(Updates with Toyoda’s background in last three paragraphs. A previous version of this story corrected Sato’s name in the third paragraph.)
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