Toyota Motor Corp. said Tuesday that Executive Vice President Akio Toyoda, a member of the founder’s family, will be promoted to president in June to lead Japan’s biggest automaker amid the global economic turmoil.
Toyoda, 52, a grandson of Toyota founder Kiichiro Toyoda, is taking the helm as the company is poised to become the world’s largest automaker. Despite a predicted year-on-year sales fall for 2008, Toyota looks on track to surpass American rival General Motors Corp., which retained the global top position for 77 years in terms of annual sales.
The widely expected appointment of Toyoda must be approved by shareholders in June, the company said. It’s the first time in 14 years that a Toyoda family member will take the top post.
“I feel very responsible because the management of the company was handed over to me at a difficult time, which some judge the toughest in a century,” Toyoda said, adding he will consider specific reforms as soon as possible after he officially takes over.
“He is the best choice in such a turbulent time,” Chairman Fujio Cho told a news conference in Tokyo. “I think drastic reforms with a new and young viewpoint are often very important to respond to big changes of the times.”
Analysts said that with the appointment the auto giant is sending a strong signal that it will move forward with reforms under a younger leader.
“It is a message aimed inside and outside the company that it will accelerate corporate reforms to weather the harsh conditions that have already reached a dangerous level,” said Yasuaki Iwamoto, an auto analyst at Okasan Securities Co.
“The current heads would have wanted to hand over the post to him (Toyoda) when business conditions were good,” he said. “But I guess plans changed because the situation won’t improve for the time being.”
In the management reshuffle, current President Katsuaki Watanabe, 66, will become vice chairman.
Toyota also announced Tuesday that the group sold 8.972 million vehicles worldwide last year, down 4 percent from the previous year.
It already overtook GM in terms of global production for the first time in 2007. GM is expected to release its 2008 sales results Wednesday.
Analysts, however, noted that every aspect of the business environment is deteriorating for Toyota as global demand weakens and the yen remains strong against the dollar. A strong yen erodes profits earned overseas.
Toyota said in December it is now forecasting a ¥150 billion group operating loss for this business year to March — its first such red ink in 70 years.
To cut costs, Toyota will reduce the number of seasonal workers to 3,000 by the end of March, from 4,500 as of the end of December. At its peak in June 2005, Toyota had 11,000 seasonal workers. The number of full-time workers stood at 69,478 at the end of March 2008.
Watanabe, the current head, is the third consecutive president from outside the Toyoda family. He followed Hiroshi Okuda, who held the post from 1995 to 1999 and Cho, who was president from 1999 to 2005.
Okuda reportedly once referred to the Toyodas “the flag of the Toyota group” to inspire Toyota employees.
Toyota also said Honorary Chairman Shoichiro Toyoda and senior adviser Okuda, both former presidents of the automaker, will leave the company’s board in June in line with the planned promotion of Akio Toyoda to president.
Their resignations from the board are seen as accelerating the rejuvenation of Toyota’s management.
Shoichiro Toyoda, 83, the eldest son of the late Kiichiro Toyoda, joined the company in 1952 and served as its president for a decade from 1982 to 1992.
Okuda, 76, who entered Toyota in 1955, helped build it into a major global company and played a key role in the firm’s development of the Prius, the world’s first mass-produced hybrid vehicle.