Toyota on Friday named finance chief Kenta Kon, a close ally and former secretary of Chair Akio Toyoda, as its next chief executive and president to steer the world's biggest automaker as competition from fast-moving Chinese rivals intensifies.

The surprise move came as Japan's top carmaker hiked its profit and sales forecasts for the current fiscal year despite the impact of U.S. tariffs.

The shift will see CEO Koji Sato step down on April 1 after just three years at the helm to become vice chairperson and take on the newly created role of chief industry officer. Approval by shareholders is expected in June.

"This expresses our determination to move toward change with all our might," Sato told reporters, calling the latest personnel changes part of a "gear shift."

Kon, known for keeping a tight lid on costs, is widely seen as the architect of a planned buyout of forklift subsidiary Toyota Industries. The deal, which would tighten the Toyoda family's grip on the group, has drawn opposition from minority investors who say it lacks transparency and is significantly underpriced.

Kon served as Toyoda's secretary from 2009, when Toyoda became CEO, until 2017, when Kon was appointed head of the accounting division. Toyoda, the founder's grandson, led Toyota for almost 14 years before naming Sato as his successor.

Profit forecast revised

The leadership change was announced alongside third-quarter results, with Toyota raising its full-year operating profit outlook by almost 12%, helped by a weaker yen and cost cuts.

Toyota shares turned positive following the announcement and results, and finished the day up 2%.

The firm expects to see net profit of 3.57 trillion yen ($22.8 billion) for the year ending in March, down 25.1% year-over-year but up from the 2.93 trillion yen previously anticipated.

Despite the "negative impact of U.S. tariffs that newly arose this fiscal year, we have reduced the extent of the profit decline by implementing cost reductions and marketing efforts," Toyota said in a statement.

Sales are expected to climb 4.1% year-over-year to 50 trillion yen, a slight upward revision. Operating profit is forecast to hit 3.8 trillion yen, up from the previous projection of 3.4 trillion yen.

However, Toyota said the September-December quarter saw net and operating profit fall despite a rise in sales, largely because of a "tariff impact" that increased expenses.

The company, which makes the Camry sedan and Lexus luxury models, estimates that tariffs erased 1.45 trillion yen from its operating profit last year.

For the October-December quarter, group profit at Toyota totaled 1.25 trillion yen, down from 2.19 trillion yen the same period a year earlier.

Toyota reported a 26% decline in profit in January-December, at 3.03 trillion yen, down from 4.1 trillion yen. But its sales rose nearly 7% to 38 trillion yen from 35 trillion yen the year before.

Global vehicle sales for the nine months grew to 7.3 million vehicles from about 7 million vehicles, as sales increased in Japan, North America and Europe.

Automakers globally are scrambling to respond as Chinese rivals upend the market. Toyota has fared better than most, thanks to its contrarian bet on gasoline-electric hybrids.

While peers have been stung by costs from a rapid push into EVs – Stellantis on Friday announced a $26.5 billion writedown – Toyota's focus on hybrids has proved prescient, underpinning record sales, including last year when it kept its crown as the world's top seller.

Tapping financial expertise

Under the reshuffle, Kon will focus on internal company management while Sato concentrates on broader industry issues – changes designed to speed up decision-making as Chinese competitors disrupt the business with unsettling speed.

James Hong, head of mobility research at Macquarie, said that while product has always been Toyota's top priority, the change likely reflected its growing need to make non-automotive decisions.

"Kon, I think he basically has more experience dealing with the financial issues of the company than Sato-san, who basically came from the product development side," he said.

Kon told a press conference he was surprised when first approached about the job in the middle of last month, saying his mind "went completely blank." Toyoda was not involved in the decision, Sato said.

Kon also oversees finances at mobility technology subsidiary Woven by Toyota, a background likely to be useful as the automaker races to close the software gap with Chinese rivals.

Sato took over from Toyoda in April 2023 at a time when the automaker faced fierce criticism over its slow approach to battery EVs. During Sato's tenure, Toyota's shares delivered a total return of 111%, including dividends, outpacing a roughly twofold gain in the benchmark Nikkei.

Even so, Toyota has lost market share over that period to Chinese rivals such as BYD in regions including Southeast Asia.