Lexus chief to take over Toyota as founder's grandson steps down
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[January 26, 2023] By
Makiko Yamazaki and Kevin Krolicki
TOKYO (Reuters) - Toyota's chief executive will step down as head of the
company his grandfather founded, the automaker said on Thursday, handing
over to the leader of its Lexus luxury brand as the Japanese giant
struggles to meet the shift to electric vehicles.
The 53-year-old chief branding officer and president of Toyota Motor
Corp's Lexus brand, Koji Sato, will take over from April 1 when Akio
Toyoda becomes chairman, it said.
The issue of who would take over the top spot at Toyota - Japan's
biggest company and one of the world's most influential manufacturers -
has been an increasing focus for investors. But the timing of the
announcement was a surprise.
Under the 66-year-old Toyoda, who led the company for more than a
decade, the automaker has appeared reluctant to embrace electric
vehicles, arguing the hybrid technology it pioneered with its once
market-leading Prius was a better fit for many drivers.
It also touted hydrogen-powered cars as the future, raising fears it
would be left behind by the rise of electric vehicles, as the flashier
and more nimble Tesla Inc eclipsed it in both innovation and share
price.
That insistence on hybrids and hydrogen also prompted criticism from
investors and environmental activists who once widely praised 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 broadcast on a webcast through the
automaker's Toyota Times channel in what looked more like 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 mention of concrete corporate strategy or
investment priorities to come. Toyoda said Sato's mission would be to
transform Toyota into a "mobility company," without specifying what that
would entail.
"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.
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Toyota Motor Corporation President Akio
Toyoda and Toyota's GAZOO Racing Company President Koji Sato attend
an event for Toyota GAZOO Racing and LEXUS at Tokyo Auto Salon 2023
at Makuhari Messe in Chiba, east of Tokyo, Japan January 13, 2023.
REUTERS/Kim Kyung-Hoon
'BATON TOUCH'
Toyoda described the hand-off as a "baton touch" in leadership, but
the staged event highlighted his continued central role. He turned
from time to time to offer instruction and reminders to Sato.
Sato said Toyoda had offered him the CEO job at the end of the year
when both were in Thailand for an event to celebrate Toyota's 60th
anniversary of operations there.
"I didn't know how to respond," Sato recalled. "I thought it was a
joke."
One Toyota executive, who asked not to be identified, said the
automaker was headed for a period of "cloistered rule," referring to
the period in Japan's history when a retired emperor continued to
call the shots.
During his more than a decade at the top, Toyoda presided over the
carmaker 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, speaking at a news conference, said his term at the helm of
Toyota started in 2009 with "crisis after crisis" from the effects
of a global recession, to Toyota's recalls and safety crisis to the
disruptions that followed 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.
On Thursday, he said Sato was chosen because he "worked hard" to
learn Toyota's philosophy.
Sato started his career at Toyota in 1992, before rising through the
ranks to become chief engineer of Lexus International, a luxury auto
brand of Toyota, in 2016, according to his profile on the company's
website.
He has held positions as the president of Lexus International and
Gazoo Racing Company, Toyota’s motorsport brand, since 2020. He also
took on an executive role at Toyota and became its chief branding
officer in January 2021.
Philip Craven, a Toyota director, said in a recorded video statement
that the board had reviewed and approved the succession plan put
forward by Toyoda and the outgoing chairman, Takeshi Uchiyamada.
(Reporting by Makiko Yamazaki and Kevin Krolicki; Additional
reporting by Tokyo bureau; Writing by David Dolan; Editing by
Muralikumar Anantharaman and Kim Coghill)
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