Toyota Set For Major Shakeup

Posted by: David Kiley on May 15, 2009

Toyota is planning a sweeping management overhaul next month when Akio Toyoda, grandson of the Japanese car company’s founder, takes over as president, the Financial Times reported on its Web site on Thursday.

The company, says the report, will replace 40 percent of its senior managers, and will change a good deal of the North American business, the newspaper said.

Toyota already plans to bring back a former senior executive, Yoshimi Inaba, to lead its U.S. operations after he had left the company in 2007 to run an airport in Nagoya, near Toyota’s headquarters.

His appointment comes as Toyota has struggled to make the most of a North American unit it established a few years ago to bring sales and manufacturing operations there closer together.

Toyota’s North American ranks have also been depleted in the last two years with departures of key executives who can lay claim to being major contributors to some of Toyota’s best years in the U.S.: James Press who left to become vice chairman of Chrysler; Jim Farley who left to become chief global marketing executive at Ford; Deborah Wahl-Myer, who left to join Chrysler as well.

Several N. American executives are expected to be replaced, though Toyota does not have a big history of recruiting senior executives from outside the company.

The changes could go so far as to impact Toyota’s advertising assignments. The company has been with Saatchi & Saatchi for decades. And it has had its Lexus brand assignment with Saatchi & Saatchi- owned Team One since its launch in the U.S. in 1989. But the company, say industry sources, is already entertaining new possibilities for its Lexus account, such as the U.S. arm of Dentsu, which handles Toyota advertising in Japan.

A Toyota official called to tell me that Team One remains Lexus’s lead agency and that the company is not entertaining agencies for the account. But there is, according to my sources, a review for an assignment within the overall account. And my experience tells me that is usually not a good sign for the agency of record, though it is often not a deal breaker. Ford entertained agency pitches for its Focus car account, and agency Team Detroit won it, and has kept the whole Ford account.

Last Friday, Toyota reported the first operating loss in its 71-year history. Stung by the global meltdown, Toyota slumped to an operating loss of ¥461.0 billion, ($4.74 billion) in the fiscal year that ended March 31.

Departing Toyota President Katsuaki Watanabe warned the automaker faces even worse losses this year despite a campaign to slash $8.22 billion in costs.