Toyota CEO Akio Toyoda is making way for new leadership. On Thursday, the carmaker announced that Toyoda is stepping down, to be replaced by Koji Sato, head of luxury subsidiary Lexus.
The handover comes amid an accelerating industry shift to electric vehicles that Toyota, the world’s top-selling automaker, has been slow to embrace.
“Toyota is not correctly responding to calls from the market to take a lead in electric vehicles,” Satoru Aoyama, senior director at Fitch Ratings, told the Financial Times in October, warning the company could “lose investor confidence.”
Toyoda, the 66-year-old grandson of the company’s founder, described his own limitations while speaking to reporters on Thursday.
“Because of my strong passion for cars, I am an old-fashioned person in regards to digitalization, electric vehicles, and connected cars. I cannot go beyond being a car guy, and that is my limitation,” he said, according to the FT. “The new team can do what I can’t do…I now need to take a step back in order to let young people enter the new chapter of what the future of mobility should be like.”
The move comes as Tesla and rivals in China are slashing prices on electric vehicles, taking advantage of their leads in EV manufacturing and putting pressure on other automakers.
Still, many industry analysts in Japan expressed surprise at the Toyota handover, as reported by Reuters.
“This is a big decision that nobody else but only Akio Toyoda could make,” Tsutomu Yamada, market analyst at AU Kabucom Securities, an online brokerage company, told the newswire.
Toyoda’s stature in Japan might make it easier for him to be frank about his shortcomings. He’ll become the carmaker’s chairman on April 1, and many think he’ll be the next chair of the powerful Keidanren (Japan Business Federation), according to the FT.
Yamada said he believes the handover to Sato could “accelerate Toyota’s generation change” and lead to an industry giant “with a faster decision-making process, having suffered from a delayed decision-making such as a launch timing of EVs.”
Toyoda’s statements last year might have reinforced the perception he was moving too slowly on electric vehicles. In October he described Toyota as a “department store of all sorts of powertrains,” insisting it will continue to offer traditional models powered by fossil fuels.
“That’s our strategy and we’re sticking to it,” Toyoda said.
Meanwhile rivals were vowing to go all-electric, including General Motors, which said it would do so by 2035.
Toyoda also cast doubt on the ability of carmakers to meet a California mandate requiring a substantial portion of sales be EVs by 2030 and effectively banning sales of new gasoline-fueled vehicles five years later. A lack of sufficient infrastructure, he said, would hold back EV adoption.
His successor Sato is also Toyota’s chief branding officer, a role he assumed in January 2021.
“Having somebody who’s sensitive to the need to develop a brand, that’s all the more critical right now as you’re heading into the EV age, where a lot of what made the brand changes,” Christopher Richter, Deputy Head of Japan Research at investment group CLSA, told Reuters. “Car companies used to live and die by their engines. You’re changing to a different type of vehicle. Building a brand around this new type of architecture, this new type of drive…is key.”
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.