Toyota names Lexus chief its new CEO as car industry faces historic shift

TOYOTA has made Lexus president Koji Sato its chief executive officer, replacing the long-serving Akio Toyoda. This comes as the world’s biggest carmaker navigates the auto industry’s once-in-a-generation shift towards electrification and greater automation. 

Toyoda, grandson of the Japanese car giant’s founder, will become chairperson effective Apr 1, the company said on Thursday (Jan 26). He became chief executive officer more than a decade ago, and oversaw Toyota’s rise to become the world’s No 1 carmaker.

Sato, 53, takes on leadership of Toyota at a watershed moment. The carmaker is facing criticism for its reluctance to plough headlong into electric vehicles (EVs), instead spreading its bets across various technologies such as battery-based EVs, hybrid technology, hydrogen-powered cars and traditional combustion vehicles. 

“I’m an engineer and have devoted myself to car-making, and I will continue to do that as chief executive officer,” he said in an online briefing.

Sato was appointed chief branding officer at Toyota in January 2021, as indicated by the carmaker’s website. After graduating from Waseda University with a bachelor’s degree in mechanical engineering in March 1992, he joined Toyota the same year in April.

In early 2016, Sato was appointed chief engineer of Lexus International, and in April the following year, he ascended to chief of Toyota’s luxury arm. In September 2020, he was also appointed president of Gazoo Racing, Toyota’s motorsport and performance road car brand.

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Sato’s appointment, and Toyoda’s making way for him, sends a clear message, said Mitsushige Akino, an analyst at Ichiyoshi Asset Management.

“The social and economic environment has become more volatile, and by becoming chairperson, 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 chief executive officer, the message is that younger people should take over.”

The shift Toyoda is making is not unprecedented. At 66, he will be moving into the chairperson’s role at around the same age as past chief executive officers of the carmaker, which tends to closely follow historical precedent. Katsuaki Watanabe ceded the role at 67. Before him, Fujio Cho left the position at 68, and Hiroshi Okuda at 66.

Takeshi Uchiyamada, the current chairperson, will step down.

Toyoda is the second-longest tenured head of a major auto company, data compiled by Bloomberg showed. He took the reins at Toyota in 2009, shortly after Elon Musk assumed his post at Tesla.

During Toyota’s annual shareholders’ meeting in June, Toyoda alluded to steps that the company was taking to find and develop potential successors. Anyone following in his footsteps must have “unshakeable 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. 

Carmakers from Volkswagen to Ford are pivoting swiftly away from combustion-engine-powered cars for new and future line-ups, with many betting on electrification as the way forward. 

While Toyota is spending four trillion yen (S$40.4 billion) to roll out 30 EV models by 2030, Toyoda earned a reputation as a contrarian on the future of the industry, saying that he doubts consumers are ready for a wholesale shift at the pace that 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 carmaker. Others, however, see it as a prescient longer-term bet. BLOOMBERG