Dive Brief:

• Marking Toyota Motor’s second CEO change in three years, the company said Friday it is promoting Kenta Kon, the company’s CFO and operating officer, to become the company’s next CEO and president, effective April 1, according to a press release. Kon, who will also retain his COO title, will hand the finance reins to Yoichi Miyazaki, currently executive VP and a member of the board of directors and operating officer.
• Kon will succeed Koji Sato in the top role, who has served as CEO, president and operating officer since 2023. Sato will take the newly established role of chief industry officer, and will also be vice chairman and member of the board of directors for which he has previously served as president.  
• Under the new structure, Sato will focus on the broader industry, including Toyota, while Kon will focus on internal company management, the company said. “This change in roles is intended to accelerate management decision-making in response to changes in the internal and external environment and to establish a structure that will enable Toyota to fully carry out its mission of contributing to society through industry,” the company said.

Dive Insight:

Toyota, which has been challenged by tariffs and currency headwinds, reported Friday that consolidated vehicle sales rose 4.3% year-over-year to 7.3 million in its fiscal quarter ended Dec. 30, while net income fell to 3.03 trillion yen ($20.3 billion) from 4.1 trillion ($26.8 billion). While North America vehicles sales also rose, it was the only region to report an operating loss in the quarter. 

The management change, which was approved by the board Friday, is partly driven by an effort to enhance the company’s earnings power and the “significant” new role that Sato is expected to play as the Japan Automobile Manufacturers Association chairman, according to the release.  

Speaking through a translator during a press conference Friday, Sato said in the past two years the company has been working on “foundation strengthening efforts” as the environment has pushed it toward a “gear change” to improve productivity and create better and more affordable vehicles. Additionally, he said the next management challenge is to accelerate industry collaboration to maintain industry competitiveness. 

“In order to maintain the international competitiveness for the car industry going forward, the whole industry should be united to advance concrete collaboration initiatives and identify the pathways for Japan to remain competitive,” Sato said through the translator. “In order to evolve vehicles in tandem with the social infrastructure, collaboration with our partners beyond our industry is becoming key. In other words for Toyota, more than ever.” 

Inside the company, Toyota also said “concrete actions” to improve its earning power and lower its break-even volume are “urgently required.” To do this, reforms that address the value chain as a whole are needed, the company said, noting that Kon as CFO has been “at the forefront of efforts to improve the earnings structure.” 

Kon is a career Toyota veteran, having joined the company in 1991, the same year he earned a bachelor’s in economics from Tohoku University in Japan, according to a biography on the company’s website. Over the decades, he took increasingly senior roles in the area of accounting, rising to hold such titles as chief officer, accounting group and ultimately to CFO in April 2020.

His ties to the company extend to the founder’s family. Kon, 57, in 2008 became the personal secretary to Akio Toyoda, the grandson of the company’s founder, Bloomberg reported. Toyoda’s skepticism about electric vehicles taking over the global car market was largely proven right in the U.S., where its hybrid vehicles have helped the company, The Wall Street Journal reported.

Kon’s successor Miyazaki, 62, has also been with the company for decades. He joined Toyota in 1986 after getting a bachelor’s in economics from Kanagawa University in Japan. Over the years, he has held increasingly senior roles in supply management, marketing, and business and operations, and business planning and finance, according to the company website.  

The new management lineup must navigate uncertainty around economic forces as well as around demand for automatic and electric vehicles. In a November note Morningstar Senior Equity Analyst Vincent Sun expressed short-term reservations about its outlook despite asserting that Morningstar analysts are expecting operating margins to start to improve through fiscal 2028 as the company seeks to mitigate the impact of tariffs, wage pressure and rising investments in growth segments.  

“While Toyota remains our preference among the big three Japanese automakers, we foresee increasing uncertainty going into next year, given headwinds to U.S. consumption and tariffs,” the report states.