Feb. 9 (Bloomberg) -- Toyota Motor Corp., the world's biggest automaker by market value, said it will promote Executive Vice President Katsuaki Watanabe, 62, to president, replacing current president Fujio Cho, 68, who will become vice chairman.

Chairman Hiroshi Okuda, 72, will remain chairman at the Toyota City, Japan-based automaker, and will keep his post at least until his term as Japan Business Federation chairman ends in May 2006, the company said in a statement. Akio Toyoda, the 48 year-old grandson of the company's founder, will be promoted to executive vice president from senior managing director.

Under Cho and Okuda, Toyota surpassed Ford Motor Co. to become the world's second-biggest automaker in 2003. The company aims to win 15 percent of the world's auto market within a decade, exceeding General Motors Corp.'s current 14.5 percent share. Watanabe's experience makes him well- suited to meeting the goal, analysts said.

``Watanabe has run all the important divisions at Toyota and understands the company intimately,'' said Koji Endo, an analyst at Credit Suisse First Boston, who rates the company ``outperform.'' ``He's young enough to help the company become the world's biggest carmaker.''

Company Veteran

Watanabe joined Toyota in 1964 and has run procurement and business planning, as well as serving as a factory chief at the Motomachi plant near the company's headquarters in Aichi prefecture. He also oversees public relations and the company's housing business.

Watanabe in December led the automaker's project to buy 10 percent of Misawa Homes Holdings Inc., which may help Toyota's housing business which has generated only minor contributions for the past 30 years.

Watanabe helped lead Toyota's effort to cut costs for about 175 auto parts that accounted for about 90 percent of Toyota's parts purchasing costs.

``Anyone who runs a company like Toyota, must have strong leadership and expertise so that people will follow them,'' said Masayuki Kubota, who helps manage the equivalent of $8.5 billion at Daiwa SB Investments Ltd. in Tokyo.

Cho has been the president of Asia's biggest automaker since June 1999, and has set up factories in the U.S., Eastern Europe and Thailand. In his six years as president, Cho streamlined Toyota's management. He reduced the number of board members to fewer than 30 from 58 and promoted non- Japanese and younger executives to join senior management.

``Toyota has been appointing reliable managers in the past, and this appointment is also a dependable one,'' said Hideyuki Ookoshi, a fund manager who helps manage the equivalent of $365 million in assets at Chiba-gin Asset Management Co. ``It's good that the automaker is refreshing management.''

Time in Kentucky

Cho, who is Toyota's twelfth president, spent seven years in the U.S. setting up and overseeing the factory in Georgetown, Kentucky, Toyota's biggest plant in North America in the late 1980s. He also oversaw the consolidation of Toyota's dealerships in Japan.

Cho is likely to be tapped as Toyota's next chairman at the end of June 2006 to replace Okuda, CSFB's Endo said.

``Toyota needed a younger president to accelerate their push and they have been looking for a candidate,'' said Endo. ``After Mr. Watanabe, it will probably be Mr. Toyoda who will become the president.''

Akio Toyoda, the grandson of the founder of the automaker, will be promoted to executive vice president. The automaker, which started as a textile equipment maker in 1937, has only named presidents who were previously executive vice presidents. Toyota has been a family-run business for much of its corporate history. Of the 12 presidents at Toyota in the past, five have come from the Toyoda founding family.

Senior Managing Directors Yoshimi Inaba, 58, Mitsuo Kinoshita, 59, and Kyoji Sasazu, 60, will be promoted to executive vice presidents. Inaba, who moved to Toyota's U.S. sales company in 1993, has helped Toyota post record sales in the world's biggest auto market. He is among the leading candidates to become president in the future, analysts say.

Toyoda, in charge of Asian operations outside Japan, is an effective manager who needs to prove his ability to the automaker's senior executives, analysts including Endo said.

Toyoda's biggest test may be in China, where the Japanese carmaker wants to close the gap with rivals Volkswagen AG and General Motors, which have a bigger share of one of the world's fastest-growing auto markets.

The management changes will take effect after the general shareholders meeting at the end of June.

To contact the reporter on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net.

Last Updated: February 9, 2005 00:33 EST