By Norihiko Shirouzu and Nathan Gomes
Feb 6 (Reuters) – Toyota Motor’s surprise CEO switch comes as global automakers confront a tumultuous industry landscape – one that the Japanese automaker has been navigating more adeptly than most.
The world’s No. 1 carmaker by sales said on Friday that it is moving away from CEO Koji Sato after a three-year stint, a relatively short tenure for the man hand-picked by Toyota Chairman Akio Toyoda. Taking the reins on April 1 will be finance chief Kenta Kon, a close ally and former secretary of Toyoda.
Analysts expressed surprise at the move, given Toyota’s relative success during Sato’s run at steering through the cascade of challenges facing all global carmakers: the rise of Chinese competitors, a costly transition to electric cars and an increasingly complex trade outlook stemming from U.S. tariffs.
“This wasn’t expected given the success that Toyota has been having, and three years isn’t a very long time” for a Toyota CEO’s tenure, said Morningstar autos analyst David Whiston.
Toyoda, the previous CEO, served from 2009 to 2023. Sato will become vice chairman and take on the newly created role of chief industry officer, the company said.
Whiston cited the success of Toyota’s electrification strategy, which centers on its market-leading hybrid technology, rather than a wholehearted embrace of electric cars.
The choice of a financial mind is also striking given Toyoda’s longtime emphasis on product development and making Toyota’s cars more exciting. When Sato took over three years ago, Toyoda touted the engineer and former Lexus chief’s credibility as a car aficionado who could lead the company into different realms of mobility.
Installing Kon could signal that the company wants a sharper focus on the financials as pressures from tariffs and a wave of Chinese exports hit some of Toyota’s key markets, said Jeffrey Liker, a professor emeritus of industrial and operations engineering at the University of Michigan and the author of several books about Toyota.
“Toyota has high standards both for the products they sell,” Liker said, “and for meeting their financial targets.”
Toyota endured criticism earlier in the decade as other global automakers went harder into electrics. But company executives feel vindicated now that battery-powered vehicles have failed to take off in some markets, especially the United States, and many automakers are dialing back their EV plans.
Toyota remains the world’s most profitable carmaker, but the company has said that the bevy of tariffs launched by U.S. President Donald Trump last year will cost it around $9 billion during its fiscal year, which ends March 31.
On Friday, the company raised its full-year operating profit outlook by almost 12%, or 3.8 trillion yen ($24.2 billion), helped by a weaker yen and cost cuts. Shares rose about 3% during U.S. trading hours Friday.
Kon is a Toyota lifer who came up through the company’s accounting and finance ranks, and has been chief financial officer since July. Kon is also involved in aspects of Toyota’s business that go beyond the core automaking operation.
He is a director at Woven by Toyota, the company’s software-focused technology unit, which is tasked with deriving fresh revenue streams that go beyond car sales. And Kon also is a director at Toyota Fudosan, the company’s real estate unit that has been leading the buyout of forklift company Toyota Industries.
At a press conference Friday to announce the changes, Kon was asked: If Toyoda is a car guy and Sato’s passion is creating cars, what kind of leader is he?
“I like cars too, but I am a finance guy now,” Kon answered. “I am extremely particular about the money and the earning power needed to ensure cars are designed, engineered and manufactured properly, and that sufficient investments to do so are made.”
(Reporting by Norihiko Shirouzu in Austin, Texas, and Nathan Gomesin Bengaluru; Editing by Mike Colias and Will Dunham)
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