Japan's leading car manufacturer Toyota appoints a financial specialist as its new CEO following a drop in earnings

Toyota Names New CEO Amid Significant Profit Decline

Toyota, Japan’s leading automaker, announced a sharp 43% decrease in its quarterly earnings on Friday. Alongside this financial update, the company revealed that Kenta Kon, currently serving as Chief Financial Officer, will step into the roles of chief executive and president starting in April, pending shareholder approval in June.

Kon, who has spent many years at Toyota, will succeed Koji Sato in both positions. Sato described these leadership changes as a decisive move towards transformation, referring to the shift as a “gear change” for the company. He will remain vice chairman at Toyota Motor Corporation.

According to Toyota, Kon brings extensive experience across multiple sectors, including automated driving, and is recognized for his expertise in boosting company profitability.

Japanese car manufacturers, including Toyota, have faced ongoing challenges due to escalating material costs and the repercussions of tariffs imposed by former U.S. President Donald Trump.

Toyota, known for models like the Camry and Lexus, estimated that tariffs reduced its operating profit by 1.45 trillion yen (approximately $9.2 billion) last year.

During the October to December quarter, Toyota’s group profit fell to 1.25 trillion yen ($8 billion), a significant drop from 2.19 trillion yen in the same period the previous year.

For the nine months ending in December, the company saw profits decline by 26% to 3.03 trillion yen ($19 billion), down from 4.1 trillion yen, despite a nearly 7% increase in sales to 38 trillion yen ($242 billion) compared to 35 trillion yen the year before.

Worldwide vehicle sales for the nine-month period rose to 7.3 million units, up from about 7 million, with growth seen in Japan, North America, and Europe.

Sato, who has led Toyota for the past three years, will continue to play a prominent role in the automotive industry as chairman of the Japan Automobile Manufacturers Association (JAMA) beginning in January. He also holds a leadership position at Keidanren, the Japan Business Federation, which represents the broader Japanese business community. Sato noted that the urgency of industry changes and the importance of his external responsibilities led him to step down as president to better focus on these critical roles.

Kon, who is regarded as a close associate of company chairman Akio Toyoda, the founder’s grandson, commented that while Toyota’s workforce is diligent and responsible, there is a tendency to resist change due to the effort invested in building existing systems. He emphasized the need for greater agility within the company.

Headquartered in Toyota City, central Japan, the company maintained its full-year profit forecast at 3.57 trillion yen ($22.8 billion), representing a 25% year-on-year decrease. Following these announcements, Toyota’s stock price rose by 2%.

In a statement, Toyota highlighted the importance of not only strengthening collaboration within the automotive sector but also expanding partnerships beyond the industry to support its ongoing transformation into a mobility company.

Reporter: Yuri Kageyama