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Koji Sato, incoming Toyota CEO, must navigate shift to clean energy

FILE PHOTO: Koji Sato of Toyoda Motor Corp at Tokyo Auto Salon 2023

By Sakura Murakami

TOKYO (Reuters) -Koji Sato, who was named on Thursday as the future CEO of Japan's top automaker Toyota Motor Corp, is an engineer with a background in diesel engines who will be tasked with navigating the company's shift to clean energy.

Currently the CEO of Toyota's luxury brand Lexus, Sato will succeed Akio Toyoda as the CEO of Toyota on April 1.

Under Toyoda, the automaker has followed a go-slow approach to electric vehicles, arguing that the hybrid technology it pioneered with the Prius will remain important along with investments in hydrogen.

Sato studied diesel engine combustion at university and joined Toyota in hopes of "contributing to society by creating the future of diesel engines", according to an interview on the website of Gazoo, Toyota's motorsport brand.

Although the 53-year-old oversaw the creation of Lexus's first fully electric model, he has also spoken of keeping other options for powering vehicles open.

He spoke of the potential of hydrogen last year in Thailand, where Toyoda himself drove a hydrogen-powered Toyota race car at an endurance race, according to the daily Yomiuri.

"It won't be an immediate substitution for electric vehicles, but it's good for people to know that there are other options available, when the increase of EVs eventually plateaus," Sato said of hydrogen-powered vehicles in the report.

Sato started his career at Toyota in 1992, before rising through the ranks to become chief engineer of Lexus International in 2016, based on his profile on the Toyota website.

"The industry itself is facing a once-in-a-century disruption, with many unknowns to navigate," said John Shook, a former Toyota manager who now consults on the lean management techniques pioneered by the company. "I can imagine that Akio thought now is the time to transition so his successor can steer the ship through the uncertainty ahead."

Sato has held positions as the president of Lexus International and Gazoo Racing Company since 2020.

He also took on an executive role at Toyota and became its chief branding officer in January 2021, which is good news for the company as the industry undergoes change, said Christopher Richter, Deputy Head of Japan Research at investment group CLSA.

"Having somebody who's sensitive to the need to develop a brand, that's all the more critical right now as you're heading into the EV age, where a lot of what made the brand changes," Richter said.

"Car companies used to live and die by their engines. You’re changing to a different type of vehicle. Building a brand around this new type of architecture, this new type of drive (…) is key,” he added.

In his spare time, Sato enjoys visiting temples in Kyoto and practises Japanese tea ceremonies, according to a profile on the Gazoo website. He drives a Toyota Supra that was handed down from his father-in-law, the profile said.

One of the main reasons Sato was elected as a successor was his love of creating cars, Toyoda said during the official announcement which was broadcast online.

That passion was obvious in a brief video clip released in 2021, where Sato sits next to Toyoda as they test-drive a Toyota Lexus. As Toyoda accelerates and whoops excitedly, Sato can be seen with a wide grin and occasionally laughing, unable to contain his delight.

(Reporting by Sakura Murakami, Elaine Lies, and David Dolan; Editing by Nick Macfie and Jane Merriman)