Toyota taps Lexus head Koji Sato as new CEO; Akio Toyoda becomes chairman

TOKYO – Toyota Motor Corp. has tapped Koji Sato, the head of Lexus and the Gazoo Racing unit, to be the Japanese automaker’s next president and CEO, as Akio Toyoda, grandson of the company’s founder, steps up to be the company’s new chairman.

The changes take effect April 1.

As part of the shuffle, current Chairman Takeshi Uchiyamada, known as the father of the Prius for his work in developing the popular hybrid vehicle, will step aside as chairman but retain a seat on the board.

The reorganization answers a long-standing question about succession for Toyoda, who became CEO in 2009 and presided over a tumultuous period of challenges and expansion, including the 2009 financial crisis, a global recall scandal and the 2011 Japan earthquake.

Under Toyoda’s watch, the company overcame these challenges to achieve record sales and earnings and solidify its title as the world’s largest automaker.

“I believe that over the past 13 years, I have built a solid foundation for passing the baton,” Toyoda said at an online briefing shortly after the announcement. The new management team, Toyoda said, “has a mission to transform Toyota into a mobility company.”

Toyoda, 66, has worked closely with Sato, 53, in Sato's roles as head of the Lexus premium brand and as leader of Gazoo Racing, a pet favorite of the outgoing president.

Toyoda said Sato was tapped partly because “he loves cars” and because of “his youth.”

Toyoda said someone younger needs to complete Toyota’s transition into a new era.

“I’m a carmaker through and through, and that’s how I’ve transformed Toyota,” Toyoda said. “But a carmaker is all that I am. That is my limit. The new team under President Sato has the mission to transform Toyota into a mobility company.”

Sato’s challenges

Among Sato’s challenges is navigating an industry being transformed by electrification, autonomous driving and connectivity.

Sato takes the helm at a time when Toyota is being criticized for falling behind in the global electric vehicle race. He is committed to breaking the old Toyota mold by developing fun-to-drive cars that are stylish and cool.

Sato must also plot a path toward a carbon neutral future while balancing the wide customer needs of the automaker and fending off nimble new rivals from Silicon Valley, China and beyond.

Sato will have to reinvent Toyota for a new era while retaining all the corporate culture that has been the secret to the automaker’s success for so long.

Toyoda is the grandson of Kiichiro Toyoda, the founder of the car company, and the son of Shoichiro Toyoda, a past president of the company until 1992. Toyoda’s shift to the supervisory role of chairman hands control of day-to-day operations to a nonfamily member for the first time in a decade.

Toyoda took over his family’s namesake automaker just as it was slumping to its first operating loss in 70 years amid the depths of the global financial crisis.

He soon faced another trial with the 2010 recall upheaval surrounding claims of unintended acceleration in Toyota vehicles. Then, the 2011 earthquake-tsunami-nuclear meltdown triple punch throttled the entire Japanese industry, throwing Toyota into defense mode.

“There was never a day that was peaceful,” Toyoda said, looking back.

Toyoda reacted by taking an “intentional pause” on rampant expansion to regroup by nailing down quality and improving product. By pursuing a more sustainable pace, Toyota soon was on the path toward new heights of earnings, sales and accolades.

In recent years, Toyoda has stepped up its race in electrification, investing billions of dollars in electric cars and batteries toward the goal of selling 3.5 million EVs a year in 2030. 

In recent years, as Toyoda passed his 60th birthday, speculation began to mount about the eventual handover of the helm. When questioned about his succession plans at last summer’s annual shareholder’s meeting, Toyoda demurred from a straight answer but said the next president must have an “unshakable conviction on why Toyota exists.”

Sato has an engineering degree from Japan’s prestigious Waseda University and joined Toyota in 1992. He was appointed chief engineer of Lexus International Co., where his noted works included leading development of the super sexy Lexus LC coupe.

He became president of both Lexus International Co. and Gazoo Racing Co. In those roles, he can often be seen hobnobbing with Toyoda track-side at various racing events, some of which Toyoda participates in as a driver of developmental carbon neutral cars.

In closely working with Toyoda, Sato has imbibed much of his outlook and ethic, indicating he will champion key elements of the Toyota Way. Speaking of his boss in an interview last year, Sato said, “He is the guiding person showing the team the vision and philosophy of the brand. … Akio's sensors as the master driver are critically important.”

Yet Sato is also a leader not afraid to shake things up.

In speaking to Automotive News shortly after he took over Lexus, he said Toyoda tasked him with one simple straight-forward mission: "Make some change." At Lexus, that translated into something sexy.

"If the question is eco or emotion, I choose emotion," Sato said.

Toyoda said it would be important for Sato to manage the company as a team, not as a one-man show. The marching orders may signal a contrast to Toyoda’s own management style.

“Up until now, I was able to use my own personal skills to lead the company to this point,” Toyoda said. “But I think it shouldn’t always be under me. There should be a new team that combines their strengths and brings Toyota to the next stage.”