Toyota Motor’s 53-year-old new CEO unveiled on Thursday is under close scrutiny as he must now lead the company through a short and fast race against new rivals and production challenges in the automotive sector.
Two weeks before the unexpected announcement made yesterday, Koji Sato showed up at an auto show near Tokyo, giggling and joking with the company’s president and CEO, Akio Toyoda, as he introduced him as the owner and ardent enthusiast of the AE86, a rare 1980s Toyota sports car that has attracted a large following.
“I like making cars. That’s why I want to be a president who continues to make cars, to show what Toyota should be in the form of cars.
Sato declared Thursday at his first press conference as the incoming president.
A mechanical engineering graduate of Waseda University in 1992, Sato has spent the past three decades designing Toyota cars, including the Prius, the company’s flagship hybrid hybrid, and a hydrogen-powered Corolla race car. Formerly the company’s chief engineer, he is currently the president of Lexus.
Toyoda cited the veteran engineer’s ability “working hard on the scene of auto production to acquire Toyota’s philosophy, skills and manners” as the main justification for Sato’s appointment.
So says analyst Seiji Sugiura of the Tokai Tokyo Research Institute, the chief engineer’s job is “like a quasi-president.” It involves “coordinating hundreds of engineers involved in car production.” Despite not being the strongest contender to succeed Toyoda, Sato’s career demonstrates his management abilities as “certifiable.”
A director who has known Sato since his early days claims that the engineer did “never showed signs of discomfort” and has always maintained one “energetic personality and a hands-on approach.” He believes that nothing new can be produced unless everything is pushed to the limit.
However, despite yesterday’s unexpected news, Toyota shares barely moved in Japan and the United States, demonstrating investors’ ambiguity over the unexpected new CEO. They were trading at 1900.5 yen at Friday’s close in Tokyo, up just 0.4% from the day before.
Sato is tasked with Toyota’s “complete model change” from an automaker to a “mobility company” as the new president of Japan’s largest automaker and most valuable company. The incumbent automaker must quickly adapt to the changing idea of cars resulting from technical advancements in new CASE areas such as connected, autonomous, shared and electric.
Responding to the market expansion of electric vehicles, which will likely be the industry’s next front in the fight to reduce transportation-related CO2 emissions, is a critical issue. Honda Motor and General Motors, competitors at home and abroad, are focusing on EVs. At the same time, the trend is encouraging younger companies such as Tesla and BYD to increase their position in the market.
On the other handToyoda has remained true to its stance on the “multi-solution approach” to the climate challenge, emphasizing not only EVs, but also hybrids and hydrogen-powered vehicles.
Sato confirmed this position in a video clip during the press conference on Thursday.
“Going electric is not the only way to achieve this goal. … You need to take a 360-degree approach to carbon neutrality.
Toyota is currently facing other problems. Increased material costs threaten the company’s profitability. It expects net profit of 2.36 trillion yen ($18.15 billion) for the entire fiscal year, a 17% decline from the previous one.
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A lack of semiconductors has also hampered the company’s production plans. With a downward risk fluctuation range of 10% due to the uncertain effects of a parts shortage, it has made a conservative forecast for a maximum production output of 10.6 million units for 2023. It had to regularly lower its production forecasts during the previous year.
In the medium term, Tokai Tokyo’s Sugiura is skeptical that Toyota would change under Sato’s leadership.
“Toyoda will likely continue to influence the company’s business, and Sato doesn’t seem the type to do things his way without consulting Toyoda.”
However, the 66-year-old is the future chairman admitted on Monday that he is an “old-fashioned person” who finds it challenging to understand contemporary ideas. He claimed that he had reached his “limits” as CEO of Toyota and could not take the organization beyond the role of “car manufacturer”.
The younger Sato is expected to overcome Toyoda’s difficulties with adaptability and resilience. “Sato will probably hold his position for about ten years,” Sugiura said. “Maybe we’ll see all sorts of things in that time.”
