24 Dec 2008
Dec. 24 (Bloomberg) -- Toyota Motor Corp. President Katsuaki Watanabe may be replaced next year by Akio Toyoda, grandson of the company's founder, after forecasting the first loss in 71 years, people familiar with the matter said.Watanabe's exit is intended to take responsibility for Toyota's operating loss forecast of 150 billion yen ($1.7 billion) for the year ending in March, said one of the people, who asked not to be identified because a decision hasn't been announced.
"Akio is the natural successor, a likelihood that's been speculated for years, even before Watanabe made it to the top spot," said John Shook, a University of Michigan management instructor and former Toyota manager.
Watanabe, 66, took his post in June 2005, positioning the Toyota City, Japan-based company to pass General Motors Corp. this year for the world sales crown. He also presided over the 13 percent sales slump through November in the U.S. where domestic automakers crippled by falling sales are being given government aid to avoid bankruptcy.
Toyota fell as much as 4.5 percent, the most in almost two weeks, to 2,765 yen and traded at 2,790 yen as of 1:01 p.m. on the Tokyo Stock Exchange. Toyota has fallen 54% this year, while GM has fallen 88 percent.
Heir Apparent
Toyoda, 52, an executive vice president, serves on management boards for Toyota divisions including the unit that handles operations in the Americas. He is the grandson of company founder Kiichiro Toyoda.
He joined Toyota in 1984, working in a variety of posts before being promoted to a senior management position in 2000. His father, Shoichiro, was the last Toyoda family member to lead the company, stepping down as president in 1992. Shoichiro Toyoda, 83, now is Toyota's honorary chairman.
Mike Michels, vice president of communications for Toyota's U.S. sales unit in Torrance, California, said talk of a senior management change is "speculation right now" and "quite premature."
Current global market conditions "could not have been anticipated," Michels said. Watanabe "is leading a very vigorous charge to reduce costs" to combat sliding sales, he said. The executive shift was reported yesterday by the Tokyo- based Asahi newspaper.
November Output Plummets
Separately today, Toyota said it cut global production 27 percent last month, the biggest in at least two decades. output fell to 589,505 vehicles in November, led by a 55 percent drop in Europe, the company said in a statement today. Japan plunged production 27% to 288,138.
Watanabe originally was scheduled to unveil a revamped Prius hybrid next month at the Detroit auto show, the main U.S. forum for promoting new models. He isn't expected to attend the 2009 event, Toyota spokesman John Hanson said yesterday.
As president, Watanabe oversaw an expansion of North American manufacturing capacity that included a $1.3 billion investment for a San Antonio plant that opened in November 2006 to help win a larger share of the full-size pickup truck market.
Sales of the Texas-built Tundra plummeted 28 percent through November, undercut by rising fuel prices in the first half of 2008. Toyota idled the factory for 15 weeks and this month said it would indefinitely halt work on a Prius plant in Mississippi.
Dwindling U.S. vehicle demand may test Toyota's record of never shedding workers in 24 years of building cars in the country.
‘Too Much Capacity'
The company, which has 30,000 employees in North America, is exhausting options to trim costs after halting work on the Blue Springs, Mississippi, plant that was to make Prius hybrids starting in 2010, and paring January production schedules at plants in the U.S. and Canada.
Analysts including Keller and Haig Stoddard at forecaster IHS Global Insight Inc. said North American payroll cuts may be inevitable for Toyota in 2009 unless market conditions improve.
"There were signals in the last three years that the market was slowing," said Maryann Keller, an independent auto analyst and consultant in Greenwich, Connecticut. "They didn't need the San Antonio factory and they absolutely did not need the Mississippi factory. Now they've got too much capacity in North America."
