Toyota overhauls management, gives more autonomy to North America

By Jerry Hirsch

March 6, 2013 12 AM PT

This post has been corrected. See the note at the bottom for details.

In a move to give more autonomy to the regions where Toyota Motor Corp. sells cars and bring a new generation of leadership to the company’s top management, the automaker announced sweeping executive changes Wednesday.

Among the moves, Toyota appointed the engineer who developed the successful Prius hybrid as chairman of the company and named its first outsider, and first former General Motors executive, to its board of directors.

Additionally, the automaker handed control of all of its North American operations, including manufacturing and vehicle development, to James Lentz, the Torrance-based executive who headed Toyota’s sales and marketing in the U.S.

“Integrating Toyota’s North America affiliates under a more unified and streamlined management structure will significantly enhance local responsibility over operations, clarify decision-making and strengthen our customer-first focus,” Lentz said.

Akio Toyoda, the grandson of the man who founded the automaker, will remain president of Toyota and a member of the board. Toyota’s board chairman, Fujio Cho, will resign and be replaced by another board member, Takeshi Uchiyamada. Uchiyamada is the Toyota executive who brought the Prius hybrid vehicle to market.

“Of course, as president, management responsibility ultimately lies with me,” Toyoda said. “However, as for daily operations, we plan to implement a more agile and autonomous business unit type of structure that will enable the executive vice presidents in charge to accelerate decision-making.”

In another move, Mark Hogan, a former General Motors Co. executive will join the board. Toyota knew Hogan from the days when he managed a Toyota-GM joint venture plant in Fremont. The venture ended and the plant was closed three years ago as part of GM’s bankruptcy restructuring. Toyota sold the property to Tesla Motors, which now produces its Model S electric vehicle at the factory.

“Clearly, Toyota is trying to get more diversity and truly get more global,” said Michelle Krebs, an analyst with auto information company Edmunds.com.

“Hogan won’t be a rabble rouser and is very familiar with the way they do business,” Krebs said.

Michael Robinet, an analyst with IHS Automotive, said the changes “signal that they are trying to obtain more input from outside Japan and better reflect the globalization of the industry.”

When he announced the moves in Tokyo, Toyoda reflected on the turmoil that has shaken the automaker since his appointment as president in 2009.

“I have learned many lessons,” he said. “Sustainable growth is what is most important. We also learned that increased sales do not equal real growth.”

Starting in late 2009, Toyota began a series of recalls related to sudden-acceleration events in its Toyota and Lexus vehicles, ultimately recalling more than 10 million cars and trucks worldwide. The automaker faced numerous state and federal investigations and Toyoda took the highly unusual step of apologizing to Congress.

Late last year, Toyota announced a record-setting $1.1-billion settlement of hundreds of class-action claims alleging the automaker’s actions involving the acceleration problem had damaged the value of consumers’ vehicles.

And last month it reached a $29-million settlement with attorneys general from 29 states and one U.S. territory over the sudden acceleration incidents. Previously, it paid about $67 million in fines to the National Highway Traffic Safety Administration for not recalling vehicles promptly.

“The quality issues were cause for all Toyota-related people worldwide to once again sincerely reflect on the importance of ‘customer first’ and ‘quality first’ with this setting deeply in our minds,” Toyoda said.

But Toyota also has faced other challenges in recent years, including plunging market share in the U.S. market. It has since engineered a rebound. The company also saw its factory production and supply chain disrupted by natural disasters including the Japanese earthquake and tsunami and flooding in Thailand.

Since then, Toyota has regained the top spot in worldwide automotive sales from GM, and its stock, which had been hurt by the recall crisis, has rebounded.

For the record, 3:05 p.m. March 6: A previous version of this post referred to the National Highway Traffic Safety Administration as the National Highway Transportation Safety Administration.

Toyota overhauls management, gives more autonomy to North America

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