Japan's top automaker Toyota names a new CEO after reporting drop in profits

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TOKYO (AP) — Japan’s top automaker Toyota reported a 43% drop in quarterly profit Friday and announced that its chief financial officer, Kenta Kon, will become its new chief executive and president.

Kon, a Toyota veteran, will replace Koji Sato in both roles in April. Approval by shareholders is expected in June.

“This expresses our determination to move toward change with all our might,” Sato told reporters, calling the latest personnel changes part of a “gear shift.”

Sato remains vice chairman at Toyota Motor Corp.

Kon, who has hands-on experience in various fields including automated driving, was tapped as an expert on ways to improve company earnings, according to Toyota. He is considered close to company chairman Akio Toyoda, the founder’s grandson.

All the Japanese automakers have been struggling because of rising material costs and the impact of U.S. President Donald Trump’s tariffs.

Toyota, which makes the Camry sedan and Lexus luxury models, estimates that tariffs erased 1.45 trillion yen ($9.2 billion) from its operating profit last year.

For the October-December quarter, group profit at Toyota totaled 1.25 trillion yen ($8 billion), down from 2.19 trillion yen the same period a year earlier.

Toyota reported a 26% decline in profit in January-December, at 3.03 trillion yen ($19 billion), down from 4.1 trillion yen. But its sales rose nearly 7% to 38 trillion yen ($242 billion) from 35 trillion yen the year before.

Global vehicle sales for the nine months grew to 7.3 million vehicles from about 7 million vehicles, as sales increased in Japan, North America and Europe.

Sato, Toyota chief for the last three years, will continue to hold a key industry role as chairman of the JAMA, or Japan Automobile Manufacturers Association.

He also holds a leadership position at Keidanren, the Japan Business Federation, which oversees Japanese businesses overall. He said those responsibilities were so critical and industry transformation was so urgent that he felt he could do a better job if he resigned from his role as president at Toyota.

Toyota officials stressed that Sato was not being replaced due to a problem, noting the latest financial results showed the automaker was still doing well despite headwinds like the tariffs, which were outside its control.

Kon said people at Toyota were responsible, but they need to be more nimble since they tend to be reluctant to make changes to systems they worked hard to set up.

Toyota, based in central Japan's Toyota city, raised its full fiscal year profit forecast to 3.57 trillion yen ($22.8 billion), down 25% from a year earlier. Toyota's Tokyo-traded stocks jumped 2% on Friday after the announcements were made.

“For Toyota to continue advancing its transformation into a mobility company, it is necessary not only to strengthen industry collaboration but also to expand partnerships beyond the industry,” the company said in a statement.

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Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama