Akio Toyoda Is Stepping Aside As CEO Of Toyota. Now What?

January 27, 20232 years ago Steve Hanley 0 Comments

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Akio Toyoda’s grandfather founded Toyota in 1933 when the carmaker became a subsidiary of Toyoda Automatic Loom Works. He became the chief executive officer in 2009 and announced on Thursday he will step aside as of April 1, 2023. His successor will be Koji Sato, who is currently the company’s chief branding officer (whatever that is) while also serving as the head of the Lexus division and the company’s GAZOO race team since 2020. Toyoda will now become the chairman for the Toyota board of directors, replacing Takeshi Uchiyamada, who will remain on the board.

That’s the news. Now, what does it mean? Akio Toyoda has been a fierce supporter of hybrid vehicles and an advocate for hydrogen fuel cells. His embrace of electric vehicles — at a time when virtually every other automaker on the planet has been rushing to electrify its product lineup — can best be described as tepid. The battery-electric cars the company has brought to market, such as the ill-named bZ4X, have also been trepidatious forays into the world of EVs with little to make them compelling alternatives to Tesla, Mercedes, Volvo, Volkswagen, and a slew of Chinese competitors.

Whither Toyota?

Will Koji Sato now boldly go where no Toyota chief executive has gone before? That remains to be seen. Japanese culture rewards conformist thinking, as evidenced by the popular expression in Japan, “The nail that sticks up gets hammered down.” But during his announcement, Akio Toyoda had some words of advice for his successor that seem to hint that a new direction could be coming for the world’s largest automaker, according to report by CNBC which translated the webcast from Japan.

“Rather than try to be like me, I want you to value your individuality,” he said. “I told Sato ‘don’t try to run the company on your own, but as a team” made up of people with “diverse personalities” to collaborate and focus on the same goal. That is the key to innovation, he said. Toyoda added that making changes and adapting is crucial for companies going forward, as no one knows what the future holds.

“I thought the best way to further Toyota’s transformation would be for me to become chairman in support of a new president, and this has led to today’s decision. Chairman Uchiyamada has long supported me in all imaginable ways. In retrospect, these 13 years have been a period of struggling to survive one day after the next and that is my honest feeling,” he added.

“The current Toyota structural change has been triggered by my resignation,” Uchiyamada said, stressing that he had been considering the timing of his retirement for “some time” to make way for a new generation. “The foundation for passing the baton to the next generation has been laid.”

“Cars in the future will evolve in the concept of mobility itself. Amid such, I hope to preserve the essential value of the car and propose new forms of mobility,” Koji Sato told the audience before adding that this represented the mission of the new leadership team.

In recent months, under Toyoda’s leadership, Toyota has given the impression that it has lost its compass, according to The Street. Last October, the company said it would invest $70 billion in electrified vehicles, with only half that figure going to develop pure battery-electric vehicles and the other half devoted to vehicles powered by fuel cells that operate on hydrogen. In fact, Toyoda’s preference for hydrogen is so pronounced, it seems he has quite a blind spot for any other technologies with the exception of the hybrid vehicles the company has been offering for the past 25 years.

Sato Speaks

At the announcement this week, Koji Sato said, “Cars in the future will evolve in the concept of mobility itself. Amid such, I hope to preserve the essential value of the car and propose new forms of mobility,” adding that this represented the mission of the new leadership team. “Energy security, for example, that is a big challenge that the whole planet needs to face. And also that the endeavor towards carbon neutrality will be one example of what we have to work on.”

While no one can quibble with such lofty statements, they offer no particular insights into how Toyota tomorrow under Sato will be different from Toyota today under Toyoda. The company is such a behemoth that course changes will take months or even years to implement.

Reflecting on how he managed the company throughout this time, Akio Toyoda said there are always two options to consider in tricky situations. “I believe that in times of crisis, two paths appear before us. One is a path towards short term success or a quick victory. The other is a path that leads back to the essential qualities and philosophies that gave us strength.”

Toyoda said that he chose the second option, which helped him improve the company and establish trust in it from stakeholders by shifting what Toyota focused on. However, following this approach can be more difficult and take a lot of time before it proves to be successful, he added. People focused on short term wins doubted him and were not supportive of his choice, Toyoda said.

That sounds like he had been getting a lot of pushback internally to his “go slow” approach to electric cars. Perhaps Koji Sato will now take the company in a new direction, one that will result in Toyota finally offering compelling electric cars. Maybe Akio Toyoda handed over the reins because he is tired of facing down his detractors. If he were to change course, that would amount to a loss of face for Toyoda — something people in the western world might not fully understand but a powerful motivating factor in Japanese culture.

The Takeaway

The situation at Toyota has been festering for a long time. As far back as 2017, CleanTechnica noted Akio Toyoda’s ambivalence about electric cars. He has complained that there are too few charging stations to support the EV revolution and he is partially correct about that. On the other hand, he has been a staunch supporter of fuel cell technology, even though hydrogen refueling stations are virtually nonexistent.

Whereas Tesla has been busy building its Supercharger network and other companies have formed partnerships to create charging networks for their customers, Toyota has refused to support either charging networks or hydrogen refueling stations, preferring to muddle through with its now ancient (in automotive terms) hybrid technology.

There is an old expression that says people must either lead, follow, or get out of the way. Akio Toyoda seems to have chosen the last option. Hopefully he will not use his position as chairman of the board to stifle Koji Sato’s plans to take the company in new directions. Toyota is one of the biggest car companies in the world, but if it declines to get on board with the changeover to battery-electric cars, it could find itself on the outside looking in as newer, more nimble companies take its place.