TOKYO — As Toyota Motor Corp. faces its biggest crisis in its history, speculation is growing it may turn to the charismatic magic of Akio Toyoda, groomed for years to lead the company his grandfather founded.
The maker of the Prius hybrid and Lexus luxury cars is sinking into its first operating loss in seven decades — a stunning reversal of fortunes for the icon of Japan Inc.
And a flurry of speculation is flying that President Katsuaki Watanabe may step down in the next few months and Toyoda, an executive vice president, be tapped to lead — earlier than expected. Unlike their Western counterparts, Japanese executives are widely expected to resign to take responsibility for dismal results.
The nationally circulated Asahi newspaper reported Tuesday, without citing sources, that Toyoda will replace Watanabe as soon as April. Toyota denied any decision has been made.
In a sign of public pressures, Watanabe, 66, was peppered with questions about his possible resignation at a news conference Monday, after he forecast an operating loss of 150 billion yen ($1.66 billion) for the fiscal year through March.
Watanabe brushed them off, saying the timing wasn't right and his priority was to steer Japan's biggest automaker through hard times.
Honda Motor Co. President Takeo Fukui was asked similar questions after No. 2 automaker lowered earnings forecasts, and denied any resignation plans.
It's no secret that Toyoda, 52, is a best-bet candidate for future president — a position in Japanese companies that wields great decision-making power and is the equivalent of chief executive in the U.S.
The friendly and unpretentious Toyoda, who has appeared before reporters in a racing outfit — unusual among staid suit-clad Japanese executives — has come to symbolize the rejuvenation of Toyota's management.
Called Toyota's "prince" by the Japanese media, he has been among the youngest executives to join the board in 2000. He became one of the company's eight executive vice presidents in 2005 — a number that has since been reduced to five.
Toyoda also has a career fitting of someone destined for the top job, spanning Toyota's global empire, including its China operations, Japan sales and Internet businesses. Earlier, he served as vice president at New United Motor Manufacturing Inc., a Fremont, California-based joint venture between Toyota and General Motors Corp., giving him key experience in the U.S.
The founder's family name is spelled with a "d," but the company name was changed to read Toyota as that was considered luckier under Japanese superstition, according to Toyota.
As a rising star with an impeccable pedigree, Toyoda has the potential to hold the rank and file together and to deliver a pride in historical legacy that few others can.
Company employees say the Toyoda family name holds special meaning, although the Toyodas own only a tiny portion of the stocks. Akio's father Shoichiro Toyoda, a former president, still wields considerable influence in the company.
That kind of morale boost may be exactly what Toyota needs as it faces what Watanabe called "an unprecedented crisis requiring urgent action."
"There was no question really about his (Toyoda's) presidency. The only question was when," Mamoru Katou, auto analyst with Tokai Tokyo Research.
While Toyota was on a growth track, the likely scenario was that Toyoda would clinch the top post around 2010, Katou said. Such conditions may have changed, but Watanabe, a procurement and cost-cutting expert, is probably not being replaced immediately, he added.
Until the U.S. financial crisis erupted this year, Watanabe's presidency that started in 2005 has overseen Toyota's stupendous expansion, riding on the success of its fuel-efficient models. Until this year, Toyota's global vehicle sales grew for nine years straight — a string that will almost certainly end this year.
Although recent Toyota presidents have tended to change every five years or so, they don't have terms. And it would be difficult to see what a leadership change could do quickly in achieving a financial turnaround. The problems Toyota is battling — a global recession and a surging yen — are largely beyond its control.
Watanabe has promised to halt expansion plans, cut thousands of jobs in Japan, slash costs and postpone the start of a Mississippi plant, while focusing on ecological technology and developing small cars and hybrids to prepare for the next growth opportunity.
"Things are so horrible I don't see what a personnel change would achieve," said Tsuyoshi Mochimaru, auto analyst with Barclays Capital in Tokyo. "It would make more sense to have a new president after things calm down."
The last three presidents at the company have not been a Toyoda family member. Akio Toyoda is the grandson of Kiichiro Toyoda, who founded the automaker. The company started as a maker of textile looms, founded by Kiichiro's father, Sakichi Toyoda.
In recent years, Akio Toyoda has often been asked about heading the company. He smiles but says the thought has never entered his mind. Appearing power-hungry would be unbecoming in Japanese culture, which values humility and understatement.
In recent years, there has been some speculation about another succession scenario: An older executive would serve as president for a few years after Watanabe — before Toyoda takes over. That's partly because presidents in their 50s at a major company are very rare in Japan.
The names tossed around in the media and informal comments from Toyota officials include Mitsuo Kinoshita, who oversees personnel and finances, and Takeshi Uchiyamada, a technology expert known as "the father of the Prius."
But like Watanabe, such board members now share in the responsibility of a dreary performance.
In the latest bad news, Toyota reported Wednesday that global vehicles sales plunged 21.8 percent in November from the same month last year to 618,000 — its biggest drop in eight years.
Toyota could still dethrone 77-year industry leader GM in global vehicle sales this year because the same dropping demand that's hurting Toyota is also squelching GM sales.
Toyota this week reduced its global vehicles sales target for 2008 for the second time to 8.96 million vehicles. Initially, it had expected to sell 9.85 million vehicles globally. Detroit-based GM does not forecast yearly vehicle sales.
At this week's news conference, Akio Toyoda tried to sound upbeat by comparing the company's woes to a baseball game that could still be won.
"I am hopeful we've reached the bottom of the seventh inning," he said. "The sales declines we are seeing are clearly abnormal."
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