Toyota CEO steps down as Tesla threatens its dominance as world's top carmaker
Toyota Motor Corp. will elevate the head of Lexus to replace long-time CEO Akio Toyoda, who steered his grandfather’s carmaker to the top of the automotive ranks while leaving a lane open for Tesla Inc. to lead in fully electric vehicles.
Koji Sato, Toyota’s chief branding officer and head of its luxury-car division, will take over as chief executive officer on April 1. Toyoda, who’s held the job since 2009, will become chairman.
Toyoda took over in a time of crisis, with General Motors and Chrysler hurtling toward bankruptcy and a global recession hammering demand. One of his early acts was selling the California plant Toyota had jointly run with GM to Tesla for a smaller sum than the amount he invested in the up-and-coming carmaker, which was still years away from producing the Model S.
While Toyota has been the world’s best-selling automaker for much of Toyoda’s tenure, Tesla overtook the company in market value in 2020. Elon Musk’s years of brash expansion also has emboldened countries to phase out combustion engines earlier than the maker of the Prius believes is feasible, saddling Sato, 53, with the twin challenges of playing catch-up and convincing regulators that more time to transition is warranted.
“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.
While Toyota is spending ¥4 trillion ($31 billion) to roll out 30 EV models by 2030, its CEO has earned a reputation as a contrarian on the future of the industry. He’s expressed doubt that consumers are ready for a wholesale shift to electric at the pace some are projecting and drawn criticism for continuing to bet on gas-electric hybrids and vehicles powered by hydrogen fuel cells.
Sato, a mechanical engineer by training, joined Toyota in 1992 after graduating from Waseda University.
In early 2016, he was appointed chief engineer of Lexus International, and in April the following year, ascended to chief of Toyota’s luxury division. In September 2020, Sato was also appointed president of Gazoo Racing, Toyota’s motor sports and performance brand. He was appointed chief branding officer of Toyota in January 2021.
Sato taking over from Toyoda “will rejuvenate the firm’s management while maintaining policy consistency," Bloomberg Intelligence analyst Tatsuo Yoshida said in a note.
At 66, Toyoda is leaving his role around the time CEOs before him have. Katsuaki Watanabe ceded the job at 67, Fujio Cho relinquished it at 68, and Hiroshi Okuda left it at 66.
“Toyoda’s choice to remain as chairman will help maintain the company’s business strategy and continuity," BI’s Yoshida said.
Takeshi Uchiyamada, Toyota’s current chairman and the father of the Prius, will step down while remaining a member of the board of directors.
Toyoda is the second-longest tenured current head of a major auto company, according to data compiled by Bloomberg, after Musk at Tesla. Since he took over in June 2009, Toyota shares have more than doubled, giving the company a market valuation of about $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.
He held general manager positions in Asia, the Middle East and Australia before being appointed as president just before Toyota recalled millions of vehicles over unintended acceleration.
“All the Toyota vehicles bear my name," Toyoda told members of Congress in Washington in February 2010. “For me, when the cars are damaged, it is as though I am as well."
The following year, he led Toyota through the earthquake and tsunami that killed more than 15,000 people and disrupted production of chips in Japan for months. That searing experience prepared the manufacturer for the Covid-19 pandemic, with the company managing through semiconductors more smoothly than Volkswagen AG and others.
Toyoda also forged partnerships with Panasonic Holdings Corp. and Softbank Group Corp. in batteries and self-driving cars. His son, Daisuke Toyoda, is viewed as a potential next-in-line CEO. He’s currently a senior vice president at Woven Planet Holdings Inc., Toyota’s advanced-technology arm led by roboticist James Kuffner, who reprogrammed Priuses at Google.
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, he said, must have “unshakable conviction on why Toyota exists."