Friday, December 26, 2008

TOKYO | As Toyota Motor Corp. faces its biggest crisis, speculation is growing that the charismatic grandson of the company’s founder may take over leadership of the automaker sooner than expected.

Japan‘s nationally circulated Asahi newspaper reported Tuesday that Akio Toyoda - long groomed for the top job - will replace current president Katsuaki Watanabe as soon as April. The newspaper did not cite sources and Toyota denied any decision has been made.

At a news conference to unveil a new compact Thursday, Mr. Toyoda evaded questions about his possible promotion, but apologized for the public worries his company had caused with its dreary earnings forecast for the fiscal year.

“I am deeply sorry,” he said. “Everyone in our front lines is working hard to keep going with energy and smiles.”

On Monday, Japan’s No. 1 automaker, which produces the Prius hybrid and Lexus luxury cars, said it was sinking into its first operating loss in seven decades - a stunning reversal of fortunes for the icon of Japan Inc.

Then Wednesday, Toyota reported that global vehicles sales had plunged 21.8 percent in November - its biggest drop in eight years.

The 66-year-old Mr. Watanabe was peppered with questions about his possible resignation at Monday’s news conference, after he forecast an operating loss of $1.66 billion for the fiscal year through March.

Mr. Watanabe, the president since 2005, brushed them off, saying the timing wasn’t right and his priority was to steer Japan’s biggest automaker through hard times. Unlike their Western counterparts, Japanese executives are widely expected to resign to take responsibility for dismal results.

Mr. Watanabe’s possible successor, Mr. Toyoda, is an executive vice president and grandson of Kiichiro Toyoda, who founded the automaker.

It’s no secret that Mr. Toyoda, 52, is a best-bet candidate for future president - a position in Japanese companies that wields great decision-making power and is the equivalent of chief executive in the United States.

The friendly and unpretentious Mr. Toyoda, who has appeared before reporters in a racing outfit - unusual among staid suit-clad Japanese executives - has come to symbolize the rejuvenation of Toyota’s management.

Called Toyota’s “prince” by the Japanese media, he has been among the youngest executives to join the board in 2000. He became one of the company’s eight executive vice presidents in 2005 - a number that has since been reduced to five.

“There was no question really about his [Mr. Toyoda’s] presidency. The only question was when,” said Mamoru Katou, auto analyst with Tokai Tokyo Research.

Before the U.S. financial crisis erupted this year, Mr. Watanabe had overseen Toyota’s stupendous expansion, riding on the success of its fuel-efficient models. Toyota’s global vehicle sales have grown for nine years straight - a string that will almost certainly end this year.

Mr. Watanabe has now promised to halt expansion plans, cut thousands of jobs in Japan, slash costs and postpone the start of a Mississippi plant, while focusing on green technology and developing small cars and hybrids to prepare for the next growth opportunity.

“Things are so horrible I don’t see what a personnel change would achieve,” said Tsuyoshi Mochimaru, auto analyst with Barclays Capital in Tokyo. “It would make more sense to have a new president after things calm down.”

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