New Toyota CEO Koji Sato faces big challenges in critical new era

TOKYO – The man replacing Akio Toyoda as the new CEO of Toyota is a cosmopolitan car-guy engineer with an eye for luxury and a thirst for speed.

In fact, in many ways Koji Sato is a mini-me version of his long-time mentor.

As the head of the Lexus premium brand and Gazoo Racing motorsports division, Sato's mission was to break the boring-old Toyota mold by developing fun-to-drive cars that are stylish and cool. He succeeded by channeling Akio's encouragement to take risks and stir things up.

"President Toyoda always told us it's OK to fail," Sato said after being tapped as the next CEO from April 1. "If you never test your limits, then new creations are never born."

Sato's new challenge will be applying that mindset to the whole company.

He must not only navigate a largely hidebound legacy metal-bender through an industry under siege by electrification, autonomous driving and connectivity. As the new boss, Sato must transform the world's largest automaker into a "mobility company," with whatever that entails.

Toyoda, 66, said Sato's "youth" – at 53 – will help write the next chapter of Toyota history.

"The new team under incoming President Sato has a mission to transform Toyota into a mobility company," Toyoda said in announcing the appointment Jan. 26. "He has youth and like-minded colleagues. I expect this new team to go beyond the limits that I can't break through."

Toyoda, the grandson of the carmaker's founder, took the helm in 2009 and steered the family's namesake company through a long period of unprecedented tumult and soaring prosperity.

Sato, as the first non-family CEO in more than a decade, could keep a hand on the wheel through 2030, a stretch that promises rapid and disruptive upheaval for the entire auto industry. His ability to either adapt and deliver or flounder could have a pivotal impact on Toyota, analysts say.

"There are a lot of complicated issues to contend with over the next decade; there is going to be a lot of change," said Christopher Richter, lead Asia auto analyst at CLSA in Tokyo. "Toyota is starting from a great base, but Mr. Sato certainly has his work cut out for him."

Loves cars

Among the issues, Richter said, is finding new revenue streams from data and other services, in an era when software adds more value to vehicles than their metal, glass and rubber.

Not to mention how to stay competitive in the race to electrify.

In some ways, Sato seems like a natural successor for Toyoda. The two have worked closely together on two of Toyoda's pet interests: Lexus and Gazoo Racing. On race day weekends, the duo can often be found mixing it up the pits. And as head of Lexus, Sato's role was to channel the will, vision and philosophy of Toyoda, who isn't just the boss but the so-called Brand Holder.

"He is the guiding person showing the team the vision and philosophy of the brand," Sato told Automotive News last year. "Akio's sensors as the master driver are critically important."

Toyoda said Sato was tapped partly because "he loves cars."

Indeed, car crazy Toyoda said he will keep his role as master driver even as he steps into the supervisorial role of chairman under the management shuffle. "In my role as master driver, I will check to see if the product has the true taste of Toyota and Lexus cars," Toyoda said.

As chairman, Toyoda will continue to have a hand on the tiller, lending continuity to strategy and corporate culture. During his own tenure, he revitalized the company with a back-to-basics ethic and orders for engineers and designers to zest things up with "no more boring cars."

Sato understands that mindset. As the chief engineer for the super svelte Lexus LC sports coupe, he proved his eye for the finer things. And his aptitude for curating Lexus' premium identity got him promoted to become Toyota's chief branding officer in 2021.

Young blood

Toyoda said someone younger needs to complete Toyota's transition into the new era.

"I'm a carmaker through and through, and that's how I've transformed Toyota," Toyoda said. "But a carmaker is all that I am. That is my limit. The new team under President Sato has the mission to transform Toyota into a mobility company."

Fluent in English and comfortable in international circles, Sato has an engineering degree from Japan's prestigious Waseda University. He joined Toyota in 1992.

Among Sato's tasks is addressing mounting criticism that Toyota has fallen behind in the global electric vehicle race. Sato must also plot a path toward a carbon neutral future, while balancing the far-flung customer needs of the world's top automaker and fending off nimble new rivals from Silicon Valley, China and beyond. In a word, Sato must reinvent Toyota for a new era while safeguarding the cultural trappings that have been the secret to Toyota's success for so long.

Toyoda is the grandson of Kiichiro Toyoda, the found of the car company, and the son of Shoichiro Toyoda, a past president of the company until 1992.

As Toyoda passed his 60th birthday, speculation began to mount about succession plans. When asked about them at last summer's annual shareholder's meeting, Toyoda said the next president must have an "unshakable conviction on why Toyota exists."

The man he eventually picked seems to have a clear idea.

"Toyota's strength lies in the fact that it is linked to the thoughts of its founders, which have continued to run through its veins," Sato told reporters. "The founding philosophy of the company remains unchanged: to take on the challenges for a new era."

Naoto Okamura contributed to this report.