It's Official—Toyota Scion to Become New Chief

After weeks of rumors, Toyota today confirmed that Akio Toyoda, a member of the company’s founding family, is to become its next president. The change, to be rubber stamped after its annual shareholder meeting in June, promotes Toyoda from his current role of executive vice president. As part of the shakeup, current chief Katsuaki Watanabe becomes vice chairman, replacing Katsuhiro Nakagawa who will retire. Toyota Chairman Fujio Cho,who preceded Watanabe as president, keeps his current role.

Toyoda, 52, told reporters in Tokyo tonight that, amid slumping auto sales and falling profits, he would try to balance necessary changes while respecting Toyota’s traditions. “We’re facing a once-in-a-hundred-year crisis,” Toyoda told reporters gathered at the Japanese automaker’s Tokyo offices. “I’ll try to make changes without being tied down by the past.”

The promotion of Toyoda comes at difficult time for the company. Hurt by a mix of unfavorable currency swings, slumping worldwide auto sales and high materials costs, Toyota forecast an operating loss for this fiscal year through March 2009 of $1.7 billion—its first such loss since 1938. The profit revision was Toyota’s second in six weeks and reinforced how the global auto industry has been slammed by the U.S. banking crisis. Net profit, which includes income from joint ventures in China, is forecast to shrink 97%, to $555 million.

Next year could be even worse. In the year through March 2010, analysts project the company’s operating loss will swell. If the supercharged yen does not weaken, warns CLSA Securities analyst Christopher Richter, for example, Toyota’s operating loss could swell to $11 billion next year.

All of which makes the likely confirmation, at 9am on Jan. 21, that Toyota has surpassed GM as the world’s biggest automaker will be little cause for celebration. Prior to tonight’s press conference, Toyota said in a statement it sold 8.972 million vehicles in 2008, a fall of 4% and its first annual sales drop in a decade. When GM announces its number tomorrow, it’s expected to be several hundreds of thousands fewer.

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