The chief executive of Toyota Motor Corp will step down as head of the company his grandfather founded, the Japanese automaker said on Thursday, handing over to the boss of its luxury car unit as it struggles to meet the shift to electric vehicles.
Koji Sato, the automaker's 53-year-old chief branding officer, who is also president of Toyota's (7203.T) luxury brand Lexus, will take over as chief executive from April 1, the company said, as Akio Toyoda becomes chairman.
The current chairman Takeshi Uchiyamada will drop his chairman title but remain on the board.
The issue of who would take over from Toyoda, the 66-year-old grandson of the company's founder, had increasingly been a focus for investors. But the timing of the succession announcement was a surprise.
Under Toyoda, the automaker has followed a go-slow approach to electric vehicles, arguing that the hybrid technology it pioneered with the Prius will remain important along with investments in hydrogen.
That approach has prompted criticism from investors and activists who once widely praised its technology and environmental record.
Toyoda said Sato's mission would be to transform Toyota into a "mobility company," without specifying what that strategy would entail.
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. "Can you be the CEO?" Sato said Toyoda asked him.
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"I didn't know how to respond," Sato said. "I thought it was a joke."
The succession announcement was broadcast on a webcast through the automaker's Toyota Times channel in a way that looked more like a talk show with a host than a formal corporate announcement.
Toyoda has pushed Toyota's in-house media channel after complaining that the automaker's message - including its strategy on hybrids - was not getting to the public.
Koji Endo, a senior analyst at SBI Securities, said the announcement of the leadership change was a "huge surprise" and said Toyoda would likely remain deeply involved in operations from his position as chairman.
"The next few years could be just a kind of apprenticeship for Sato as the next president," he said.
During his more than a decade at the top, Toyoda presided over the carmaker during a period of intense change in the auto industry and rising uncertainty about how legacy automakers such as Toyota can fend off the challenge from newer - and often nimbler - 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 own recall and safety crisis to the disruption 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 succession planning.
On Thursday, he said Sato was chosen because he "worked hard to learn Toyota's philosophy".
"The CEO needs youth, energy, strength."
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 Toyota 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.
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.
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.
There was almost no specific discussion of Toyota's strategy and no discussion of financial targets for investors.
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 Uchiyamada.