In Japan, there is no mistaking the significance of
, the grandson of Toyota Motor's founder, taking over as the carmaker's president. After Toyota ( (TM)
) announced the move in January, local media referred to it as taisei hokan
, a historical reference to the Meiji Restoration in 1867, when Japan's emperor took back power from the shoguns who had been ruling the country. At a press conference on June 25, two days after taking the helm from
as the 11th president in the automaker's 72-year history, the Toyoda family scion steered clear of announcing a big shakeup. He said the struggling company would go on with efforts to cut costs, boost regional autonomy, and develop affordable, high-quality vehicles that stir emotions. "[We] will work hard to develop cars that people fall in love with," he said.
But perhaps in a sign that the automaker expects depressed demand to return to levels experienced before the global financial crisis took hold, Toyoda, 53, gave no hint that he would take more radical steps, such as closing factories or cutting jobs. Despite significant capacity worldwide to produce 10 million cars a year—3.5 million more than Toyota's sales projection for the year ahead—
, one of five executive vice-presidents alongside Toyoda, said he expected
to recover in two to three years and repeated recent comments by Watanabe: "We are not thinking of closing factories right now."
Indeed, on a day when
announced that global production in May was down 38%, Toyoda and his new senior management team cut, by recent standards, reasonably optimistic figures. In Japan, the company said sales, driven by the popularity of the new third-generation Prius, were showing signs of improvement. Sales in North America, with 250 million vehicles on the road and favorable demographics, will recover. In Europe, Toyota will distinguish itself from
. And in emerging markets, the company's low market share in countries such as Brazil and India means there is plenty of growth potential.
More Red Ink
Toyoda also insisted that he hopes to bring an end to Toyota's losses as soon as possible. Toyota lost $4.5 billion in the year through March 2009—its first annual loss
since 1950—and expects even more red ink this year, but the new CEO said he will do everything in his power to "avoid three straight years of losses."
Toyoda added that for all the current challenges, the company had survived crises in the past. In 1950 it was on the verge of bankruptcy after a labor dispute, and the company emerged stronger from the oil crises of the 1970s and the trade disputes in the '80s. "Toyota has overcome many challenges during seven decades in business," he said. "Toyota will bounce back."
To do that, he said the company will save an extra $8.5 billion in costs this year "as a very first step." Toyota will take advantage of government incentives around the world, such as cash-for-clunkers schemes promoting more environmentally friendly cars in Japan, Europe, and the U.S. Toyoda added that a new, more regionally oriented management structure will see the company move away from aiming to provide a full lineup of vehicles in all markets, and instead provide cars that meet with local tastes. In emerging markets, for instance, that will mean developing more affordable cars and not just tweaking models sold elsewhere. In North America, Toyota has rehired Yoshimi Inaba, a charismatic former executive who left the company to run an airport near Nagoya during Watanabe's tenure, to be the face of its U.S. operations. "We will determine what role Toyota will play and what we wish to achieve in each region," Toyoda said.
For all that, Toyoda gave few new details on how Toyota will change under his leadership or whether the cars Toyota offers in the future would differ markedly from those planned under former chief Watanabe. One auto analyst in the audience complained that the speech and answers to questions from reporters were heavy on platitudes and light on detail.
Voluntary Pay Cut
Still, Toyoda, youthful by Japanese CEO standards, looked comfortable in his new role and is, after all, only two days into his new job. He skillfully shrugged off questions about his family heritage, saying he makes decisions as he sees them but accepted that his family connections meant he had benefited from the best advice and support throughout his 25-year career at Toyota.
His renowned love of cars—he recently drove a Lexus LF-A, a sports model Toyota is developing, at a 24-hour race at the Nürburgring in Germany—also shone through. When asked about whether he would give up driving on racetracks now that he is running the company, he said he hadn't decided but conceded he might soon have to hang up his racing overalls. "[Colleagues] tell me 'Please stop,'" he said. And in a savvy public relations move, which is bound to go well in
, he said that, in light of the current difficulties faced by Toyota, he would take a 30% pay cut for one year from July and that other top managers, on a voluntary basis, would also accept pay cuts.