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Toyota's personnel reshuffle to return management to founding family, pushed by depression

2, 06. 2009

   Toyota Motor Corp. has announced its personal reshuffle in which Akio Toyoda, 52-year-old vice-president, was promoted to the position of presidency. He is a grand son of the late Kiichiro Toyoda, who founded the company, and the eldest son of Shoichiro Toyoda, 83-year-old honorary chairman. It is the first time in 14 years for someone from the founding family of the company to take over the presidency of the company. Toyota is currently reeling from serious sales decline amid the worldwide recession. The situation is such that the company will inevitably suffer from its first ever fall into the operating red. People inside and outside the company are now focusing their attention on whether Akio Toyoda could manage the company properly get out of the pinch.

"His management savvy is unknown," people say

   "I did not have any choice about my being born into the Toyoda family." This was what he said by reading from a prepared note in answer to a press reporter's question about the "return of the management to the founding family" during a press conference on Jan. 20, 2009. A person close to Toyota said Akio's assumption of the company's top position was "an appointment as a matter of course." Akio's statement at the press conference indicated, however, he was very conscious about the floating criticism against his appointment by hereditary.

   Akio was born in 1956 to Shoichiro as father and mother who came from the Mitsui family of the defunct zaibatsu. After graduating from the Keio University, he obtained his MBA from a U.S. university. He joined Toyota when he was 27 in 1984. He was then promoted fast to become a vice-president of the company in 2005.

   It had been widely believed that Akio would succeed Katsuaki Watanabe, current president of the company, as president. Because of the worldwide financial crisis following the bankruptcy of the major U.S. securities company Lehman Brothers in the fall of 2008, Toyota is likely to fall into the red of 150 billion yen for the term ending in March of 2009. Some people strongly expressed the fear that "Akio's reputation might be hurt" if he assumes the presidency of the company at this time.

   Also, there are some other people who hold that "Akio has been only promoted under the protection of the Toyoda family and cronies. "

Founding family can carry out large-scale restructuring smoothly

   Facing the severe climate for management, Toyota must have chosen the way to "hoist the flag of the Toyota group" braving the negative comments against appointment of Akio as president. The company is said to be expecting to strengthen the magnetism of the leadership and sense of security by placing a member of the founding family at the top place. The company is hoping that a major change can be made in the expansion policy the company has been taking and a large-scale restructuring can be carried out smoothly under the leadership of someone from the founding family.

   The auto markets are plummeting across the world unprecedentedly. The new car sales in the United States decreased by 35.5% on year in December 2008 at 896,124 units, dropping below the 1 million unit level for the fourth consecutive month. Recovery of the markets cannot be seen under the present condition. The view expressed by many people in the auto industry is that "the condition may continue to be severe for up to five years to come."

   Under the circumstances, what is expected of Akio, who will be in charge of the management of the company as a person from the founding family, is pave the way toward the recovery of the business performance of Toyota and lead the company toward that goal steadily. If he fails, criticisms will rise higher against his hereditary appointment and the company may experience stronger head winds.

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