Toyota CEO taps younger successor amid paradigm shift in industry

Toyota Motor Corp's surprise announcement last week of a change in its top management came as CEO Akio Toyoda, the grandson of the founder, picked an executive more than 10 years younger than him as his successor at a time when the global auto industry faces a once-in-a-century paradigm shift driven by decarbonization and digitization.

The head of the auto group's Lexus brand operation Koji Sato, 53, will become CEO in April while 66-year-old Toyoda who has led the company since 2009 will become chairman, allowing him to devote more time to lobbying activities. Toyoda is currently the chairman of the Japan Automobile Manufacturers Association. Toyoda said in a press conference last Thursday that youthfulness is an essential quality for his company's next leader when game-changing disruption in the industry is on the horizon.

Toyota's previous presidents, except for those from the founding family, have always been in their 60s when they assumed the top position.

"When no one knows what the right answer is (for the industry's future), the leader needs to be like a foreman," Toyoda said in a press conference. "In order to do that, you have to be physically, mentally and passionately fit."

The leadership change comes when even a company like Toyota, the world's biggest car seller, is under pressure to embark on a transformation and overcome challenges in achieving greener vehicles and adapting to new technologies as newcomers venture into making electrified vehicles.

Toyota remains the leader in hybrid cars, but some industry analysts say Toyota is lagging behind European and U.S. rivals in the electric vehicle race even though the automaker, which has been developing hydrogen-powered engines, has said it is not fully convinced that going electric is the right way to go.

Calling himself a man of traditional car-making, Toyoda admitted at the press conference the difficulty of transforming the company in a new era given his age and his long managerial experience of making conventional cars running on fossil fuel.

"I felt it would be best for me to become chairman to support the new president in further reforming Toyota," Toyoda said.

Toyoda has faced a series of ordeals since he took the helm at the age of 53. In 2009, the company got entangled in a U.S. recall woes over complaints about unintended acceleration of its cars, leading him to testify before the U.S. Congress.

The company also grappled with production disruptions when its plants and supply chains sustained extensive damage from a massive earthquake and tsunami in Japan's northeast in 2011. "Never did I experience a peaceful year" during his tenure, he said.

Toyoda focused on improving its brand image by trying to better cater to consumer tastes. Unlike other automakers' heads, he himself competed in races and promoted Toyota's motorsport brand Gazoo Racing, helping its GR performance models gain popularity among sports car buyers.

His successor Sato has also been closely involved in Toyota's motorsports operations, currently serving as the head of Gazoo Racing Co.

In recent years Toyoda has been keen on paving the way for the evolution of the Japanese auto industry. He has been urging the government, as the industry group chief, to implement policies that will contribute to the growth of auto businesses, a key driver of the country's manufacturing and transport service sectors employing 5.5 million people.

Toyoda said in the press conference he would step up lobbying activities for the auto industry. There are expectations in the business community that Toyoda will be tapped as the head of Japan's biggest business lobby Keidanren.

His father and former Toyota Chairman Shoichiro Toyoda served as Keidanren chairman from 1994 to 1998, and Hiroshi Okuda, who led Toyota in the late 1990s, headed the lobby from 2002 to 2006.