[News Figures] Who is 'Akio Toyoda,' the 'World No.1' Toyota Chairman Returning After 14 Years?

"My Role Is to Support the New President"
Sometimes Holds a Skeptical View on the Electric Vehicle Transition

[Asia Economy Reporter Jeong Hyunjin] "I am old-fashioned. I hope the new president will use his youth as a weapon to push forward the transformation into a mobility company that I could not achieve."

Akio Toyoda, president of Toyota Motor Corporation, the world's number one automobile manufacturer, said this on the 26th when announcing his promotion to chairman for the first time in 14 years. Although he is scheduled to take office as chairman in April, his remarks at the press conference emphasized the significance of stepping back from the president position. He said the role of the chairman is to support the new president.

Akio Toyoda, President of Toyota Motor Corporation of Japan (Chairman-designate, right), and Koji Sato, Executive Officer (President-designate) [Image source=EPA Yonhap News]

The successor president appointed was Executive Officer Koji Sato, who joined Toyota in 1992 and has been involved in parts development for models such as the Corolla and Prius. Toyoda cited "youth" as the reason for naming his successor. Executive Officer Sato is 13 years younger than Toyoda. Toyoda emphasized, "In an era where there is no clear answer, to drive transformation, the leader must have the stamina, energy, and passion to remain on the front lines."

◆ Fourth-generation descendant of the founder... "Never thought I would serve more than 10 years"

Toyoda is the great-grandson of Kiichiro Toyoda, the founder and former chairman of Toyota Motor Corporation, making him the "fourth generation of the founder." At 66 years old this year, he graduated from Keio University in Japan in 1979 and joined Toyota in 1984. At age 44 in 2000, he was appointed director at Toyota, then served as managing director in 2002, senior managing director in 2003, executive vice president in 2005, and in June 2009, after 14 years, became president as a member of the founding family.

At the time of his inauguration, Toyota was in crisis, recording an operating loss of 461 billion yen (approximately 4.4 trillion KRW) for the 2008 fiscal year due to the global financial crisis. In 2010, the year after his inauguration, Toyota faced a massive recall issue in the United States, and he personally testified at a U.S. congressional hearing. In 2011, the Great East Japan Earthquake and tsunami caused severe damage to factories and disrupted supply chains. Bloomberg reported that "these experiences enabled Toyota to prepare for COVID-19."

Akio Toyoda, President of Toyota Motor Corporation
[Photo by AP Yonhap News]

Toyoda led Toyota to become the world's number one automobile manufacturer. After regaining the top spot in global automobile sales in May 2020 for the first time in five years, Toyota maintained the number one position for three consecutive years until last year. However, last year, Toyota lost the number one spot in U.S. automobile sales to General Motors (GM) after just one year, and sales in China also declined for the first time in 10 years since 2012.

Toyoda revealed that he decided to change the president last year. He said, "There was never a year during my presidency that was comfortable. At first, I did not think I would serve as president for more than 10 years," adding, "It took 13 years, but the foundation for a presidential change has now been laid."

Tatsuo Yoshida, a Bloomberg Intelligence analyst, evaluated, "When the new president Sato starts his duties, he will inject vitality into the company's management while maintaining policy consistency. Toyoda's role as chairman will help maintain the company's business strategy and continuity."

◆ Skeptical about all-in on electric vehicles... also sold Tesla shares

The change in president at Toyota, the world's number one company, draws attention to whether it will lead to a shift in existing investment strategies. This is because Toyoda has publicly expressed a skeptical view of the global automobile industry's focus on transitioning to electric vehicles.

[Image source=Reuters Yonhap News]

Until just a month ago, he maintained the same stance. According to The Wall Street Journal (WSJ), during a visit to Thailand in December last year, he told reporters, "Many in the automobile industry who remain silent question whether pursuing only electric vehicles is appropriate," emphasizing that electric vehicles are just one option alongside hybrid vehicles that combine gasoline engines with electric motors and hydrogen fuel cell vehicles.

Toyoda's judgment has been a factor delaying Toyota's transition to electric vehicles. Although Toyota declared in 2021 that it would invest $35 billion to accelerate the shift to electric vehicles, it maintains a strategy of investing in various types such as hydrogen fuel cell vehicles and hybrid vehicles compared to competitors like GM and Honda. In particular, it emphasizes the importance of hybrid vehicles developed in the 1990s.

However, with the electric vehicle boom centered on Tesla, the world's largest electric vehicle company, Toyota was surpassed by Tesla in market capitalization in July 2020. Toyoda invested $50 million in Tesla in May 2010, acquiring a 3.15% stake and collaborated on electric vehicle development. However, cooperation results were poor after 2015, and he sold all shares in 2017.

Newly appointed president Sato said, "I want to preserve the essential value of automobiles and propose new forms of mobility," adding, "I will take on the challenge toward a new era."