Akio Toyoda will step down as president and CEO of Toyota, handing over the helm of Japan's largest carmaker at a time when the company faces the challenge of adapting to zero-carbon transportation, the automaker said on Thursday.
Koji Sato, a 53-year-old who is president of Toyota's luxury brand Lexus, will become the new CEO, the company said.
The current chairperson, Takeshi Uchiyamada, will drop his title, but remain on the board. Toyoda will take over in a series of changes that take effect from April 1.
The issue of who would take over from Toyoda, the 66-year-old grandson of the company's founder, had increasingly been a focus for investors. But the timing of the succession announcement was a surprise.
Under Toyoda, the automaker has followed a go-slow approach to electric vehicles, arguing the hybrid technology it pioneered with the Prius will remain important, with investments in hydrogen.
That approach has prompted criticism from investors and activists who once widely praised its technology and environmental record.
Toyoda said Sato's mission would be to transform Toyota into a "mobility company", without specifying what that would entail.
Sato said Toyoda offered him the CEO job at the end of the year when both were in Thailand for an event to celebrate Toyota's 60th anniversary of operations there. "Can you be the CEO?" Sato said Toyoda asked him.
"I didn't know how to respond," Sato said. "I thought it was a joke."
The succession announcement was broadcast on a webcast through the automaker's Toyota Times channel in a way that looked more like a talk show, with a host rather than a formal corporate announcement.
Toyoda has pushed Toyota's in-house media channel after complaining the automaker's message, including its strategy on hybrids, was not getting to the public.
Koji Endo, a senior analyst at SBI Securities, said the announcement was a "huge surprise" and Toyoda would likely remain deeply involved in operations as chairperson.
"The next few years could be just a kind of apprenticeship for Sato as the next president," he said.
During his more than a decade at the top, Toyoda presided over the carmaker during a period of intense change in the auto industry and rising uncertainty about how legacy automakers such as Toyota could fend off the challenge from newer, often nimbler, challengers such as Tesla.
Toyoda said his term at the helm of Toyota started in 2009 with "crisis after crisis", from the effects of a global recession and Toyota's recall, to a safety crisis and the disruption that followed the 2011 earthquake and tsunami in northern Japan.
At a shareholder meeting in June last year, he said he was "thinking about timing and the selection of a successor" when asked about succession planning.
On Thursday, he said Sato was chosen because he "worked hard to learn Toyota's philosophy".
"The CEO needs youth, energy, strength."
Sato started his career at Toyota in 1992, before rising through the ranks to become chief engineer of Lexus International, a luxury auto brand of Toyota, in 2016, according to his profile on the company's website.
He has held positions as the president of Lexus International and Gazoo Racing Company, Toyota’s motorsport brand, since 2020. He also took on an executive role at Toyota and became its chief branding officer in January 2021.
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