TOKYO Toyota Motor Corp (7203.T) on Tuesday named Akio Toyoda, grandson of the company's founder, to head the world's biggest automaker and lead it through the global crisis that has slashed demand for cars worldwide.
The announcement ends years of speculation over when Toyoda, who turns 53 in May, would take the helm after he joined the board of directors in 2000 after 16 years with the company.
He faces a tough challenge. Toyota and its rivals are grappling with slumping sales in North America, Europe and Japan amid a spreading recession in rich countries, with sales also slowing in emerging markets such as China and Russia.
The sharp downturn in the United States has pushed rivals General Motors Corp (GM.N) and Chrysler LLC CBS.UL to the brink of collapse.
Toyoda will be taking the wheel of an automaker in far better shape but hurting nonetheless, as it reported on Tuesday its first drop in annual sales in a decade.
"We face a crisis unprecedented in the past 100 years," Toyoda, a motorsports enthusiast who holds a master's degree from Babson College in the United States, told a news conference.
"I believe it is necessary to go back to the basics -- of placing the customer first and going to the source of all issues -- while at the same time taking bold action to overcome the difficulties we face," he said.
Toyota, whose name is derived from the family name, is heading for its first-ever consolidated operating loss in the year to March 31, hit also by a stronger yen, after reporting record earnings last year.
Shares of Toyota rose 2.3 percent to close at 3,100 yen in Tokyo, boosted by Toyota's announcement during trade that it would be unveiling a new management structure -- which had been widely tipped to put Toyoda into the president's chair.
The benchmark Nikkei average .N225 fell 2.3 percent.
Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, said Toyoda and his new team needed to act quickly to scale back investment and cut costs.
"Right now the important thing is to stop the bleeding," he said. "Management of the business has not gone well over these past three years. They expanded too much."
Toyoda, currently executive vice president in charge of domestic and overseas operations, will replace 66-year-old Katsuaki Watanabe as president in June as part of a planned reshuffle of top management.
Watanabe will become vice chairman as Akio becomes the sixth Toyoda and youngest executive since the founder, Kiichiro, to head the company. Chairman Fujio Cho will stay in his post to support the new management structure.
Likening the current crisis to a severe storm at sea, Cho admitted there was some hesitation about handing the baton to the relatively young Toyoda. But he lauded his successful, extensive career at Toyota, saying the timing, ultimately, was right.
"It's at a time like this that we need a youthful leader," Cho said, sitting next to Toyoda at the news conference in Tokyo. "Drastic measures will need to be taken sometimes, and I believe Executive Vice President Toyoda is the best person for the job."
Toyoda, for his part, said he would spend the next few months until his formal appointment detailing more specific goals.
As a member of the founding family, Toyoda faces the added pressure of meeting his predecessors' expectations of fulfilling a role as a flag-bearer and binding force for the company.
Toyoda, displaying a modesty characteristic of the company, said he had a long way to living up to those expectations.
"I think someone like the honorary chairman deserves that label, but I don't see myself as a flag-bearer," he said, referring to his father, Shoichiro Toyoda.
"All I can say is that I will do my best to be remembered as a flag-bearer myself after 20, 30 years," he added.
Underscoring the tough market conditions, Toyota said sales across the group fell 4 percent to 8.972 million vehicles in 2008, in line with previous company forecasts.
For the parent only, which excludes minivehicle maker Daihatsu Motor Co 7262.T and truck unit Hino Motors Ltd (7205.T), sales fell 5 percent to 7.996 million vehicles, Toyota said in a statement. Sales at the two units rose from 2007.
The tally is almost certain to keep Toyota ahead of General Motors Corp as the world's biggest automaker after the U.S. giant suffered a 23 percent sales drop in the United States in 2008, compared with Toyota's 16 percent fall. The United States is the single-biggest market for both automakers.
GM is scheduled to announce its 2008 sales on Wednesday.
(Additional reporting by David Dolan and Nathan Layne; Editing by Jon Loades-Carter)