(Updates with Hogan’s background in seventh paragraph.)
March 6 (Bloomberg) -- Toyota Motor Corp. President Akio Toyoda overhauled his top management for a second straight year, strengthening his control over the world’s largest carmaker to vie with General Motors Co. and Volkswagen AG.
Three of Toyoda’s seven executive vice presidents will step down, being replaced by just two people, the Japanese carmaker said in a statement today. Three outsiders will be added to the board, including Mark Hogan, a former GM group vice president, to be the first foreigner on Toyota’s board since 2007.
The changes mean Toyoda, 56, will have replaced all but one of his top lieutenants within a span of two years as he grooms the next generation of leaders at Japan’s largest manufacturer, founded by his grandfather in 1937. While the yen’s 7 percent decline this year is boosting earnings, the company faces a growing challenge from U.S. and European automakers in markets from China to the U.S.
“It’s been gradual, steady process and this is just part of the change that’s in his mind,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, which manages about $300 million in assets. “It’s good for Toyota.”
Toyota rose 2 percent to close at 4,830 yen in Tokyo trading before the announcement. The stock has gained 21 percent this year, helped by the drop in the yen, which is boosting the value of earnings from overseas.
Toyoda’s overhaul extends to the company’s 16-member board, bringing in outside directors -- three of them -- for the first time in Toyota’s history. Toyota also nominated four executives to the board, meaning only two board members pre-dating Toyoda’s ascension to president will be left after the changes.
Among the newcomers is Hogan, 61, whose ties to Toyoda stretch back more than decade, when both worked together at the now-defunct Toyota-GM joint venture plant in California called New United Motor Manufacturing Inc., or Nummi.
After leaving GM, Hogan became president of Canadian auto- parts maker Magna International Inc. in 2004 for three years. He became an overseas adviser for Toyota in 2011 after the Japanese company recalled more than 10 million vehicles worldwide in 2009 and 2010 for defects associated with unintended acceleration.
“I have lots of memories from that time,” Toyoda said in reference to Hogan and his time at Nummi. “He knows our local management.”
Ashvin Chotai, managing director of Intelligence Automotive Asia in London, said Hogan’s recruitment to the board is the most interesting personnel change this year because Toyota is signaling the company will become more global in its board decision-making.
“Mark had extensive dealings with Japanese automakers and will add additional different international perspective to the board discussions,” Chotai said.
Aside from Hogan, Toyoda brought in Ikuo Uno, executive adviser at Nippon Life Insurance Co., and Haruhiko Kato, president of the Japan Securities Depository Center, as outsiders entering Toyota’s board.
“The appointment of outside board members shows Toyota has opened up more and become fully global,” outgoing Chairman Fujio Cho, 76, told reporters today in Tokyo.
‘Father of Prius’
Cho will be succeeded by current Vice Chairman Takeshi Uchiyamada, whom Toyoda referred to as the “father of the Prius” for his past work in developing the world’s best-selling gasoline-electric car. Uchiyamada, 66, who holds an applied physics degree from Nagoya University, became vice chairman in June 2012.
Satoshi Ozawa, 63, who in 2010 was the first lieutenant that Toyoda promoted to executive vice president, will oversee developed markets in North America and Europe. Masamoto Maekawa, 63, who was promoted last year, will be the top executive in charge of operations in Japan.
Mitsuhisa Kato, also promoted last year, will keep overseeing research and development. Seiichi Sudo, elevated to executive vice president this year, will oversee a newly created unit center that will develop components ranging from engines to transmissions.
Yasumori Ihara was named the executive vice president in charge of emerging markets, including China. Ihara, 61, who was promoted this year from senior managing officer, will face the challenge of reversing the company’s declining sales in China, the world’s largest automobile market.
Though Toyota outsold all other carmakers worldwide last year, it trailed behind GM, Volkswagen, Nissan Motor Co. and even Hyundai Motor Co. in China.
Toyota’s struggles were compounded in September, after protests flared because of a territorial dispute between Asia’s two biggest economies, which also caused Chinese consumers to shun cars made by Honda Motor Co. and Nissan. The wave of anti- Japan sentiment led Toyota, which had previously counted on China becoming its third million-unit market in 2012, to push back that goal until after this year.
Demonstrations have since subsided, though Toyota sales in the country have fallen this year, while GM has posted gains.
Among the six executives promoted this year to senior managing officer -- the level right below executive vice president in Toyota’s hierarchy -- Jim Lentz will oversee North American operations as the region’s chief executive officer. Lentz was previously the U.S. sales chief.
“These changes will help us to achieve sustainable growth and realize our global vision by giving more responsibility to each region,” Toyoda said in a statement.
Atsushi Niimi, 65, who managed production and dealt with supply-chain disruptions after the March 11 earthquake and tsunami, is among the three outgoing executive vice presidents. The other two are Shinichi Sasaki, 66, who was in charge of quality control when Toyota recalled millions of vehicles from 2009, and Yukitoshi Funo, 66, who looked after Toyota’s Asian business outside of Japan.
The overhaul of Toyoda’s top lieutenants is part of a broader realignment of the company’s main automotive business, which will be divided into four units to speed up decisions, Toyota said. One division will focus on the Lexus luxury brand, another for mature markets, Ihara will spearhead a third division focusing on emerging markets and Sudo will oversee the fourth unit, which will deal with engines and transmissions.
Toyoda also said the reshuffles are meant to clarify responsibilities. For example, Ozawa and Niimi’s responsibilities overlapped in markets such as Europe because of the previous organizational structure.
“After the reshuffle, Akio’s burden should be reduced and he should be able to have more time to concentrate on the larger picture of Toyota’s operations,” said Takeshi Miyao, an analyst for Carnorama Japan in Tokyo. “Toyota’s new management is impressive in the sense that job roles for each executives are clearly defined.”
--Editors: Young-Sam Cho, Bill Koenig