Toyota Motor president finally has team in placeToyota Motor President Akio Toyoda has cleared out the remnants of top management inherited when he took the helm in 2009 in a revamp to restore the fortunes of the world’s biggest carmaker after years of turmoil.
Toyota on Wednesday announced the retirement of the only three executive vice presidents not appointed by Toyoda and laid out a new, more clearly defined corporate structure with a greater focus on emerging markets. Three outside directors will join the board for the first time, including former General Motors Vice President Mark Hogan, who’s known Toyoda since they worked at a U.S. joint venture more than a decade ago.
“It’s been a gradual, steady process and this is just part of the change that’s in his mind,” said Edwin Merner, president of Atlantis Investment Research in Tokyo, which manages about $300 million in assets. “It’s good for Toyota.”
The shakeup marks a turning point for Toyoda, 56, who took over after Toyota’s first annual loss in almost six decades and whose efforts to remold the company his grandfather founded have been hobbled by mishaps and disasters. Although Toyota outsells all other carmakers, it’s facing increased competition in the United States and has been losing out to GM and Volkswagen in China, the world’s biggest car market.
Toyota’s introduction of a system to hire outside directors and its appointment of a director, including a foreigner, signals a change in the governance of Japanese companies, said Kengo Nishiyama, senior strategist at Nomura Holdings. Toyota’s move to hire outside directors may prompt other Japanese companies to follow suit, he said.
Before Toyota’s yen-fueled rally, shares had slid about 15 percent under Toyoda’s reign and net income was a sixth of the level in the year before the company booked its record loss in fiscal 2009. Japan’s biggest manufacturer remains the giant among global carmakers by market value, yet its revenue last year was less than Volkswagen’s. Five years ago, Toyota was more than $50 billion ahead.
Toyoda’s shake-up has been a while coming.
After taking over as president in the midst of a U.S. recession and slumping sales, he was thrust into the first of many crises with the humbling recall of millions of vehicles starting in 2009 and a grilling the following year by U.S. lawmakers over safety. By March 2011, Toyoda was able to take stock, laying out a vision for the future and seeking to draw a line under the past. Just two days later, Japan was hit by a devastating earthquake and tsunami that played havoc with supply chains, followed months later by flooding in Thailand, the carmaker’s Southeast Asian manufacturing hub.
“After the reshuffle, Akio’s burden should be reduced and he should be able to have more time to concentrate on the bigger picture,” said Takeshi Miyao, an analyst for Carnorama Japan in Tokyo. “Toyota’s new management is impressive in the sense that the roles for each executive are clearly defined.”
Key to the plan’s success will be Yasumori Ihara, who was named executive vice president in charge of emerging markets. Ihara, 61, who was rehired when Toyoda was named president in 2009, has the challenge of reversing the company’s declining sales in China.
Though Toyota outsold all other carmakers worldwide last year, it trailed behind GM, Volkswagen, Nissan Motor and Hyundai Motor in China.
Toyota’s struggles were compounded in September as Chinese consumers shunned Japanese cars because of a territorial dispute between Asia’s two biggest economies. The wave of anti-Japan sentiment led Toyota, which previously counted on China becoming its third million-unit market in 2012, to push back that goal until after this year.
While demonstrations have subsided, Toyota sales in the country fell this year while GM’s gained.
Toyota may also need help in the United States, where the company saw sales of its Camry, the most popular car in the country, drop the most in 16 months in February.
Toyoda turned to old colleague and GM veteran Hogan, 61, naming him to the company’s board - the first foreign director since 2007. Hogan’s ties to Toyoda go back to when both worked at the now-defunct Toyota-GM joint venture plant in California called New United Motor Manufacturing in 1987.
“I have lots of memories from that time,” said Toyoda.
After leaving GM, Hogan spent three years as president of Canadian auto-parts maker Magna International from 2004. He became an overseas adviser for Toyota in 2011 after the company recalled more than 10 million vehicles worldwide in 2009 and 2010 for defects associated with unintended acceleration. Bloomberg