The timing was amazing but the choice was anything but. Toyota Chief Executive Akio Toyoda unexpectedly announced last month that he needed to step down as “an old-fashioned car guy” whose limitations in an increasingly digital and electric industry were being exposed, with only his replacement His closest disciple would be Kōji Sato to appear. Another executive was described as a regular “car lover”.
With the world’s leading automakers falling behind electric vehicle makers because of their reluctant embrace of the technology, it was not surprising that Toyota’s biggest leadership change in 14 years failed to impress analysts or investors, its shares The price failed to pop up on the news.
Sato, 53, currently heads the premium Lexus brand and will replace Toyoda, 66, as president and chief executive on April 1, with the latter becoming chair. Analysts have said it is too early to judge whether the little guy could be a game-changer for the Japanese conglomerate’s electric vehicle strategy, or just a place holder until the next founding member of the family takes over.
The background of the incoming CEO shows that he is not an iconoclast. The former chief engineer is also referred to by his colleagues as “the car guy” and joined Toyota in 1992 after graduating with an engineering degree from Waseda University, where he researched diesel engines.
According to Toshio Fujimura, a former Toyota engine engineer who is now a visiting professor at the Aichi Institute of Technology, Sato developed a love for driving cars after countless rides on test circuits, when in the early part of his life he learned about suspension and suspension. were developing braking systems. livelihood.
Fujimura said, “Her insatiable passion for cars must be the biggest reason why she was chosen as Mr. Toyoda’s successor.”
He faces a huge challenge in steering Toyota so that it maintains its position as the world’s best-selling carmaker, while transitioning an industry from simply making cars to providing mobility services, connected vehicles, and more. And must interact to use the self-driving technology.
Takaaki Nakanishi, a veteran automotive analyst who runs his own research group, said a turnaround under Sato would also include a deeper commitment to accelerating sales of electric vehicles.
The company, which is exploring alternative hydrogen technology and is known for its own hybrid system that combines the engine and battery, has long resisted going “all in” on electric cars, warning that That a sharp transition would have wide consequences for society and society as a whole. Environment
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Critics say Toyoda, the grandson of the company’s founder and CEO since 2009, has reneged on his pledge to be a carmaker for all by delaying the large-scale rollout of electric vehicles. This has left Japan’s largest carmaker with only one mass-produced EV model – the bZ4X – on the market.
Nakanishi said, “Mr. Toyoda could not make a serious commitment to electric cars.” “There is no future at Toyota if Mr. Sato cannot reverse its backward electric business.”
Sato caught Toyoda’s attention when he began working under him in 2016 as the chief engineer for the Lexus luxury coupe. Toyoda has been a keen racer, known from his career as Morizo, which included competing in the Nürburgring 24-hour endurance race, and Sato developed the flagship Lexus LC model, which also appeared in a race car version. .
A former Lexus executive who worked with him said, “Mr. Sato is a true car lover.” “He was able to create a beautiful but raceable car, which became the core concept of the Lexus brand.”
However, the same car-loving qualities that impressed Toyoda may prove to be an Achilles heel, limiting Sato’s ability to reshape the organization, according to Sanshiro Fukao, a senior fellow at the Itochu Research Institute.
Fukao said, “Mr. Toyoda appointed a ‘car guy’ like himself for the next chief executive officer.” “It is uncertain whether Mr. Sato can proceed with a review of Toyota’s electric strategy in this rapidly changing car industry.”
Other analysts see Sato as one of several interim CEOs until Toyoda’s son, Daisuke, who is in his early 30s and currently senior vice president of Woven Planet, the company’s self-driving unit, succeeds. , Ready to lead the group.
The current chief executive officer is also expected to retain significant influence over the company in order to become chairman. When announcing the leadership change, he said, “I said to Sato: try to run the company not on your own, but as a team.”
Sato, who is also Toyota’s current branding chief, has experience leading the electric transition of the Lexus division, which in 2021 pledged to make all its premium cars fully electric by 2035.
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Analysts said Toyota to date has not considered electric vehicles mainstream enough to make it a money-making business and has been caught up in the rapid shift towards electric vehicles globally.
People close to Toyota said it is in the process of overhauling its electric vehicle strategy, developing a dedicated platform that would be more cost-effective in mass-producing electric vehicles. The current one partly shares structure with petrol vehicles and hybrids, with some elements unnecessary to electric cars, making it more expensive to produce.
Kota Yuzawa, analyst at Goldman Sachs in Tokyo, said Toyota’s competitive advantage would be its ability to develop batteries internally rather than buying them from manufacturers.
“Batteries account for 30 to 40 percent of the cost of an electric vehicle, so understanding the cost structure of an EV could help Toyota win the battle in the end,” he added.
However, the company is yet to firmly commit. “Toyota’s strategy is to make a profit by producing mass-market products,” said Satoru Aoyama, senior director at Fitch Ratings, arguing that battery electric cars are not ready for the mass market today.
“Turning Lexus electric is an entry point into what we expect to widen the mass market over the next decade,” he said, while adding that Toyota was unlikely to make its entire vehicle line-up electric.
This view is shared by automotive analyst Nakanishi, who cites Sato’s love for time-honored technology.
“He is the keeper of Toyota’s commitment to keeping the internal combustion engine alive,” he said.
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