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Toyota CEO Akio Toyoda Steps Down, Hands Reins to Lexus Chief Koji Sato

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Koji Sato, Toyota’s new CEO

Akio Toyoda will step down on April 1 as chief executive officer and president of Toyota Motor Co., turning the company over to hand-picked successor Koji Sato, currently the head of both the Lexus brand and Toyota’s Gazoo Racing. Toyoda will step into a new role as the chairman of the company founded by his grandfather.

Toyoda has been CEO of the Japanese giant for 13 years and, for most of that period, received widespread praise for what proponents viewed as a dynamic management style. But Toyoda has come under some criticism of late, particularly from environmental groups that have faulted his open skepticism about battery-electric vehicles.

“I believe that over the past 13 years, I have built a solid foundation for passing the baton,” Toyoda said from Tokyo during an online media briefing.

“A carmaker through and through”

“I’m a carmaker through and through, and that’s how I’ve transformed Toyota,” the 66-year-old executive added. “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.”

Describing himself as only a carmaker wasn’t entirely accurate. During more than a decade at the helm of one of the world’s largest automotive manufacturers, Toyoda has pushed the company to explore a variety of other venues, including autonomous and connected vehicle technologies, robotics and flying cabs.

During an appearance at the Consumer Electronics Show in January 2020, Toyoda announced plans for “Woven City,” an ultra high-tech, 175-acre city of the future to be built in the shadow of Japan’s iconic Mt. Fuji.

“With people, buildings and vehicles all connected and communicating with each other through data and sensors, we will be able to test AI technology, in both the virtual and the physical world, maximizing its potential,” Toyoda said during the announcement in Las Vegas. “We want to turn artificial intelligence into intelligence amplified.”

2023 Toyota bZ4X XLE FWD driving
Consumer repsonse to Toyota’s first EV, the bZ4X crossover has been unenthusiastic.

An electrified controversy

Still, there is no question his primary focus has been on Toyota’s core business: designing, building and selling automobiles. But, even there, the company has undergone major changes since Toyoda was appointed CEO.

Like the rest of the industry, Toyota has made a major shift in its product line-up, scaling back coupes and sedans in favor of the SUVs and CUVs that dominate today’s global market. And it is rapidly ramping up production of electrified vehicles with an emphasis on hybrids, including the recently redesigned icon, the Prius, as well as plug-in hybrids and hydrogen fuel-cell vehicles.

While Toyoda has also outlined plans to expand the automaker’s line-up of fully electrified vehicles, it has been slow off the mark. It only launched its first long-range EV, the bZ4X, last year. And so far, it has received a lackluster market response.

Sticking with the strategy

On numerous occasions, Toyoda has stressed his belief that a wholesale shift to EVs is not warranted. In his temporary role as head of the Japanese automotive manufacturers association, he went so far as to warn EVs could destroy the country’s auto industry.

“That’s our strategy and we’re sticking to it,” he said last September, saying the automaker will hold to a strategy of selling a broad range of low- and zero-emissions vehicles, despite increasing criticism by environmental groups such as the Sierra Club and Greenpeace. Nonetheless, one of Toyoda’s last big moves as Toyota CEO was to order a deep dive review of the company’s electrification strategy.

“Never a day that was peaceful”

Toyota’s proposed Woven City

Whatever the criticism, Toyoda will likely be remembered for guiding the automaker through tough times, including the global recession that hit during his first year on the job, the 2010 “unintended acceleration” flap, as well as the crisis triggered by the 2011 earthquake and tsunami that inundated Japan. Toyota continues to vie for the crown as the world’s best-selling automotive manufacturer and is routinely among the industry’s most profitable.

“There was never a day that was peaceful,” Toyoda said of his lengthy tenure during Thursday’s briefing.

As chairman, and with his role as Toyoda family scion, the executive will still wield strong influence over a company that started out in the textile industry.

But it will now be up to 53-year-old Sato to guide strategy, as well as oversee day-to-day operations.

A multitasker

Sato has shown an ability to multitask already. Along with his roles at Lexus and Gazoo Racing, he currently serves as Toyota’s chief branding officer.

He has been in sync with his mentor, especially when it comes to Toyoda’s frequent call to put more passion into Toyota Motor Corp. vehicles. That’s been an area where the Lexus brand has taken frequent criticism over the years, its products often faulted for lackluster design and performance.

Akio Toyoda wants to transform Toyota into a guess what.

When appointing Sato to head the luxury brand, Toyoda ordered him to “make some change,” the new Lexus chief told Automotive News. Among other moves, he introduced more distinctive – if sometimes controversial – styling and shifted the engineering focus away from delivering benchmark fuel economy in favor of better performance.

“If the question is eco or emotion, I choose emotion,” Sato explained to the trade publication.

Plenty of challenges awaiting the new CEO

Going forward, Sato will have plenty of his own issues to deal with. For one thing, the new CEO will have to win back one-time Toyota fans in the environmental community.

There are more practical and immediate challenges awaiting Sato, however. Toyota has been hard hit by the global shortage of semiconductor chips and other key components, as recently as last month ordering cuts in production. That led to a sharp dip in sales, dealers frequently selling vehicles as soon as they were delivered to their showrooms.

The automaker recently announced plans to build production volumes back closer to normal in the fiscal year starting April 1, the same day Sato formally takes over.

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