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Toyota's troubles test mettle of President Akio Toyoda, grandson of its founder

AUTOS

Leader of the automaker for only eight months, he seemed to remain aloof from the automaker's crisis over the last two months, at least until his late-night apology Friday.

February 05, 2010|By Coco Masters
  • Toyota President Akio Toyoda introduces the revamped Prius in Toyko. The 53-year-old grandson of company founder Kiichiro Toyoda took over as the youngest president in Toyota's history last year,
Toyota President Akio Toyoda introduces the revamped Prius in Toyko. The… (Shizuo Kambayashi / Associated…)

Reporting from Tokyo — As the first family member to lead Toyota Motor Corp. in 14 years, Akio Toyoda had a lot to prove, and his handling of the automaker's sudden-acceleration problems is testing his mettle.

Nicknamed the "prince" by Japanese media, the 53-year-old grandson of company founder Kiichiro Toyoda took over as the youngest president in the company's history eight months ago after Toyota's biggest annual loss -- $4.4 billion for its last fiscal year.

Despite his age, however, Toyoda's 25-year track record at Toyota -- he started as a junior manager and was the first in his family to take Toyota's management exam -- suggests that he's a strong manager with a fresh perspective.

But is that enough?

With its shares at a 10-month low and a $30-billion loss in market value, Toyota estimated that it would lose as much as $880 million in sales this year because of the recalls and that costs of repairs would add $1.1 billion to that.

Notoriously publicity shy -- he's only talked to the media a few times in the last year, one a 75-second comment on the street -- Toyoda seemed to remain aloof from the company's crisis over the last two months, at least until his late-night apology Friday.

That lack of public involvement might be perceived as "arrogant behavior from a guy whom many suspect got the job thanks to his name," said Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University in Japan.

But pedigree aside, Toyoda's advantage is that he is unlike his predecessors.

Proficient in English, Toyoda comes across as a risk-taker, a sportsman who recently raced a Lexus in the 24-hour endurance competition at Germany's Nurburgring, a Grand Prix-style race.

While getting his law degree from Tokyo's prestigious Keio University, he dreamed of playing Olympic field hockey. Instead, he went on to get his master's degree in business administration at Babson College in Wellesley, Mass.

He set out on a career away from autos by joining an investment bank and working as a management consultant, living on Manhattan's Upper East Side, then moving to London.

Later, his musings about a possible career at Toyota were met with a lukewarm response from his father, Shoichiro Toyoda, who told his son: "No one wants to be your boss."

That didn't stop Akio Toyoda. In 1984, he joined the company's Motomachi Plant division in Toyota City and, by 1998, had moved up to vice president of New United Motor Manufacturing Inc., Toyota's joint venture with General Motors Corp. in Fremont, Calif.

With the fresh thinking of a young executive, Toyoda shunned the company's conservatism and invested his own money in an Internet retail business, Gazoo.com, where he became project general manager in 2000.

At the same time, Toyoda became one of Toyota's youngest board members and was considered a shoo-in down the road for the top seat at Toyota.

"Akio Toyoda is a very gifted and personable leader," said Gary Convis, a former Toyota executive who now is vice chairman of auto parts company Dana Holdings Corp.

Convis believes that Toyota will do "everything humanly possible" to fix the quality and safety problems that have led to recalls of more than 9 million vehicles. Customers, he said, will "respect their actions with continued confidence in their products."

Others aren't so sure.

Despite Toyoda's experience with the management styles in Japan, the U.S. and China, he remains the image of privilege that his surname carries.

"He's been in guarded, safe positions as the prince of Toyota," said Nobuyuki Idei, former chairman and group chief executive of Sony Corp., a global electronics firm that has seen a few product recalls itself.

"Toyota's corporate management should take a strategic step and hire a professional team to handle the [quality control] issue," said Idei, who also is a former General Motors director.

He said the automaker's slow response didn't reflect the mature attitude expected of a leading global firm.

Toyoda's failure to let his leadership shine now in a moment of crisis hurts not only Toyota but could affect other Japanese automakers as well.

This week, both Honda Motor Co.'s executive vice president, Koichi Kondo, and Mitsubishi Motors Corp.'s executive officer, Masao Ohmichi, said Toyota's recall could taint the brand images of all Japanese automakers.

Even if seen as a cosseted executive, Toyoda is qualified to lead the company out of its problems, said Satoshi Hino, author of "Inside the Mind of Toyota: Management Principles for Enduring Growth."

"The most important factor for a corporate top is whether he is ready to dedicate his entire life to management of the company," Hino said. "By working as a member of the Toyoda family at Toyota, he has it naturally."

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