Akio Toyoda named Toyota president amid global crisisTue, 20 Jan 2009
Akio Toyoda, scion of Toyota Motor Corp.'s founding family and now its next president, will bring a U.S. perspective to the automaker as it battles falling sales and an unprecedented financial crisis.
Toyoda, 52, will succeed current President Katsuaki Watanabe in June, the company said Tuesday, ending weeks of speculation. Local media have touted him as an annointed prince riding to the rescue of a Japanese corporate icon.
He will inject an international mind-set into a company whose overseas operations, including those in the United States, now account for most of its sales and are contributing to the first operating loss in 70 years.
"I think there will be an increased sense of urgency," Chris Richter, an auto analyst at CLSA Asia-Pacific Markets. "There are so many challenges right now."
Indeed, today's Toyota would be unrecognizable to Akio's grandfather Kiichiro, who founded the automaker in 1937, or his father, Shoichiro, himself a president from 1981 to 1992.
Most of the company's history has been a march of progress. But now, Toyota is slashing production, cutting jobs and reeling from tumbling sales amid a global financial crisis. The company says it will post an operating loss for the fiscal year ending March 31.
North America accounts for a third of Toyota's worldwide revenue. U.S. sales fell 15.4 percent to 2,217,660 vehicles last year.
The world's largest carmaker announced separately on Tuesday that global sales dropped 4 percent to 8.972 million units in 2008. It marks Toyota's first sales decline in 10 years.
The affable, baby-faced Akio Toyoda:
-- Will be the first president to have gone to school in America and worked here.
-- Has experience in the increasingly important China market.
-- Has a reputation for challenging old-guard conservatism.
Toyoda's international portfolio includes stints heading Toyota's China and Asian operations and serving as a vice president at its General Motors joint venture in California, New United Motor Manufacturing Inc. Last summer he was put in charge of all overseas business.
He is deeply grounded in U.S. business practices, customs and finances.
Like Edsel Ford II, Akio Toyoda graduated from Babson College in Massachusetts, a school that specializes in educating the children of business leaders. After graduating in 1983, he worked at a New York investment bank.
A top priority for Akio Toyoda will be rethinking the company's overseas business, analysts say. His team will have to consider shifting more production offshore to replace domestic output as it battles a soaring yen and rising raw-material costs.
"Toyota is the strongest manufacturer in the world, but it is strategically weak because it has not embedded itself in the richest market in the world, the U.S.," says Michael Wynn-Williams, an analyst at IHS Global Insight. He sees more production shifting overseas "as quickly as possible."
Watanabe is chairing an "emergency-profit" committee charged with trimming fat. But aside from production and job cuts, there has been little to show in the way of broad overhauls.
Honda Motor Co., by contrast, held a year-end news conference last month to outline a litany of drastic measures meant to keep the company in the black. They included canceling President Takeo Fukui's beloved Formula One program and the long-anticipated replacement for the NSX sports car.
Toyoda may come under pressure to deliver similar sacrifices.
He has a track record of pushing through unpopular decisions.
Long before e-commerce was a buzz word, Akio Toyoda pioneered Toyota's online business initiatives--against stiff opposition from the executive floor.
He began by trying to apply Toyota's fabled production system to dealerships. Toyota could build a car in less than a day, but dealers took another 40 days to deliver it to a customer and get paid. Akio wanted to cut that time by more than 10 days to improve dealers' cash flow.
Denied a budget for his ideas, Akio used his own money to start Gazoo.com. It soon blossomed into an online referral service, offering basic information to shoppers about car features, sticker prices and finance plans. Yet, the real success rested on its evolution into an online shopping mall where people can by everything from music CDs to bean paste.
By building relationships with consumers, Toyota hopes they will return to Gazoo when they want to buy a car. Then Gazoo directs them to a Toyota dealer.
Akio Toyoda will be the first Toyoda to become president since 1995, when his uncle Tatsuro Toyoda stepped down. The Toyoda family owns only 2 percent of the company's stock but benefits from a hard-to-measure extra clout that the Japanese call "plus-alpha."
The company takes a "t" instead of the "d" in the family's name because that was considered luckier in Japanese numerology.
During Tatsuro Toyoda's tenure as president, Toyota's share of the Japanese market shrank and the company drifted. After suffering a stroke in 1995, he was followed by three non-family presidents -- an era that was seen as a check on nepotism in a publicly traded company.
Toyoda's appointment must be approved at a board meeting in June, and Watanabe will then take the post of vice chairman. But the risks aren't lost on the home audience.
Ahead of the company's official announcement, Japan's Yomiuri newspaper pondered Akio's new role, saying: "Toyota gambles on founding family's prestige."