A Look Behind the Scenes at Toyota’s Change of President

A Top-Secret Changing of the Guard

On January 26, Toyota announced that effective April 1, President Toyoda Akio would become chairman and current Operating Officer Satō Kōji would take over as president.

I was visiting Toyota for a different article on that same day, and when I saw the press release distributed at half past three in the afternoon, I was shocked. The Toyota officials I was meeting with said they were as surprised as I was. In fact, even within the company very few people knew about the announcement in advance, and the information was controlled with the utmost strictness to prevent even rumors from leaking.

What is the plan behind this sudden change? Before we explore that further, first let us look back on Toyoda Akio’s career.

Akio (commonly referred to by his given name to avoid confusion with the company’s moniker) joined Toyota Motors in 1984. Despite being part of the company’s founding family, he received no special treatment and was hired through the same process as any other employee.

His first posting was at the Motomachi Plant in the city of Toyota, Aichi Prefecture, where he helped to produce the eighth-generation Crown. Then, after working in domestic sales, he joined a variety of major projects like the launch of the general automotive information website Gazoo.com, served as vice-president of the General Motors joint venture NUMMI, and oversaw IMV, a global strategic vehicle platform targeting emerging markets. In 2005 he was appointed Toyota’s vice president, and then in June of 2009 became president at the age of 53.

Akio recalls, “I got a cold reception from the media, and even inside the company the attitude was ‘let’s see what you’ve got’ from a lot of people.” The company was in serious trouble, suffering both from the aftershocks of the global financial crisis and a major recall issue in the United States. There was a generally smug sentiment inside Toyota: “Let the rich boy from the founding family try to pull our chestnuts from the fire. And if he messes up, he can take the blame and we can toss him out.”

How did Akio manage to steer the company through such difficulties? At the time, Toyota’s philosophy was to focus on cars that were easy to make and sell. But that was all centered on the company’s benefit, with no concern for the customer’s perspective. Akio responded to this by calling on the company to return to basics as what he called a kurumaya, a “carmaker,” to focus on making ever-better automobiles through product-centered management.

To achieve that, he implemented bold reforms from top to bottom, including local production, agile decision making, the in-house company system, the Toyota New Global Architecture platform design concept, and the use of motorsports to drive improvements.

Toyoda Akio speaking at the Tokyo Auto Salon in January 2023. The president’s active pursuit of media exposure helped significantly with Toyota’s brand image improvement. (© Toyota Motor Corp.)

Some voices quietly discussed these bold reforms as being “dictatorial” or “turning the company into a private plaything,” but those were serious misunderstandings. Toyota at the time was suffering from what is called “big company disease,” where no one member would move to act for fear of assuming responsibility for any failures. What Akio did is say, “I’ll take all the responsibility.” The result is the Toyota we see today, where the period from April to December 2022 saw record revenues of ¥27.5 trillion.

Akio’s 14 years as president became a series of battles with all kinds of problems. In overall operations, those included cleaning up after the global financial crisis, the recall hearing in the United States, issues related to the Great East Japan Earthquake of 2011, the COVID-19 pandemic, the company’s withdrawal from Russia following its invasion of Ukraine, and the semiconductor shortage crisis.

His influence in products can be seen in the revival of sports models that pull at the heartstrings of car lovers worldwide and the rethinking of major products like the Crown, Corolla, and Prius. That has resulted in Toyota leading the world in sales volume for three years running.

The new Prius, which went on sale in January 2023. Even as carmakers around the world have made a sudden shift to battery-powered electric cars, this car seeks to expand the potential of hybrid electrics. (© Toyota Motor Corp.)

The Motivation Driving Transformation

Why did Akio feel the need to work so hard? There are three major reasons.

First is his feeling of responsibility as descendant of the founding family. He has said that his forebears went through great hardship, only to pass on without seeing much reward for it. So, he does this to repay them for their hard work, pass on their passions, and to finally complete what they had hoped to accomplish, but were unable to do so during their own times.

The next is a pursuit of something beyond profits. Akio’s main management principle is “for someone other than myself.” This is clearly in keeping with the Toyota management philosophy of “producing happiness for all” and the fundamental “Japan love” that it holds for the 5.5 million Toyota drivers in Japan. Akio himself holds a great many other titles. He is qualified as one of the company’s “master drivers,” responsible for final checks of new vehicles’ capabilities. He also competed in racing events under the name Morizō, chairs the Japan Automobile Manufacturers Association, is chairman of the property developer Toyota Fudōsan, and is a member of the Fédération Internationale de l’Automobile senate. It seems his dedication to working “for someone other than myself” stands behind all of this work.

The third reason is one not commonly known: frustration. “People have always looked at me as a ‘rich boy from the founding family,’” he says. “Because of that, I’ve had to deal with the frustration of not getting support, the frustration of my accomplishments being ignored, the frustration of always being sneered at no matter what I did. Of people saying, ‘Toyota can’t make cars like that.’ I’ve dealt with more frustrations than I want to say.”

All those frustrations became a driving force keeping him going through his tenure as president, and the result has been a massive change for Toyota. Particularly surprising is that, despite being a massive enterprise with over 370,000 employees, it can make quick, flexible decisions like a one-man shop. You can see the results of that in the company’s attractive current product lineup.

Akio Toyoda took on the guise of Morizō to drive a hydrogen-powered GR Yaris in the August 2022 World Rally Championship in Belgium. Morizō is not only an active race driver but has also served as a “master driver” evaluating models during development. (© Toyota Motor Corp.)

Reasons for Stepping Down and Ideals Passed on to His Successor

The decision was spurred by Chairman Uchiyamada Takeshi’s decision to retire. Akio says, “I came to think that the best way to keep Toyota’s transformation going would be for me to move on to the chairman position in support of a new president.”

Akio approached Satō Kōji about the president’s role during in December 2022, at Super Endurance race in Thailand.

“He called me over during the race and said, ‘Would you do me a favor? Would you become president?’ I thought it was a joke at first and had no idea how to react!” Satō says, looking chagrined.

Akio says, “I thought I should broach the topic in my own way. Rather than talking to Satō in the president’s office, we always rode in cars together and talked on-site. So, rather than inviting him somewhere private to talk, I thought it would be best to ask him like that, in an extension of our normal relationship.”

Satō joined Toyota in 1992. After working in chassis design, he was put in charge of product development concept planning. He then went on to spearhead the Lexus LC, which hit the market in 2017, as chief engineer. That model represented a major project turning a concept car that had never been intended for the market into a mass-production vehicle.

Satō studied the situation at the beginning of the project, but decided that commercialization was impossible with the technology and resources available to Toyota/Lexus at the time. When he told Akio that it would not work, the response was, “I know we can’t do it now. What I want to know is, how do we become able to do it? We have to change.” So, Satō decided to think outside the box and developed a new platform and other major components to bring the LC to the market.

The Lexus LC went on sale in March 2017 after Satō took charge of its development. This coupe has become the luxury brand Lexus’s flagship model. (© Toyota Motor Corp.)

After overseeing development at Lexus and serving as the company’s vice president, Satō become president of Lexus International in January 2020 and of the Gazoo Racing company in September 2020, thus heading up both the company’s premium and sports branches. It was Satō, in fact, who proposed to Akio the hydrogen-powered Yaris that GR is now developing in the motorsports area.

Satō will be Toyota’s president from April 1. With the automotive industry in the middle of what has been called “a once in a century transformation,” he will be taking over the world’s top automaker. (© Toyota Motor Corp.)

Akio had this to say about his hopes for Satō’s presidency:

“I’m now an old-fashioned person. To enter a new chapter of what future mobility can mean, I realized it was time for me to take one step back. He’s now the same age I was when I took over as president. In addition to his youth, he’s surrounded by colleagues with much more diverse personalities than I had around me. I hope he can use those two weapons to achieve the transformation I could not—to turn Toyota into a mobility company.”

Tasks for the New Leader

What else will change with this new president? At the February 13 announcement of the new management team, the discussion raised three issues that the company will have to address. These are business reforms starting with next-generation EVs; enhancing the Woven City concept, an experimental future city built around new mobility ideas; and achieving carbon neutrality in Asia.

With it comes to the next-generation EV issue, some media outlets wrote things like, “With his resignation, Toyoda Akio has finally admitted that the company was late in joining the shift to EVs, and the new Satō team will do their best to make up for that delay.” This is a serious misread, though. The company’s basic stance remains unchanged: that it will do its best to bring about carbon neutrality, but without knowing which avenue is the right one, it is important to keep a broad range of options available.

Satō himself says, “The theme of our new management team is ‘inheritance and evolution.’ Now that President Toyoda has established Toyota’s values, what we must do next is accelerate their implementation.”

(Originally published in Japanese. Banner photo: Outgoing president Toyoda Akio, at left, with incoming President Satō Kōji, at center, and retiring Chairman Uchiyamada Takeshi. © Toyota Motor Corp.)