Toyota’s latest Chief Executive comes from the company’s finance department. So, now that the company is making less cash and is no longer Japan’s most valuable company, it makes sense that he’s blaming the car side instead of the financials. His solution: Toyota should cut models from its lineup.
New CEO Is Looking To Cut Costs, Boost Profits
Toyota President CEO Kenta KonToyota
CEO Kenta Kon took a spot on the company’s board yesterday during Toyota’s 122nd annual shareholder meeting. The meeting came just a month after Toyota reported its profits dropping around $5.9 billion from 2024 to 2025. That’s the second-straight year of decline, and it’s expected to cut another 20% this year.
Kon has been touring Toyota facilities, picking up slack and learning more about what makes it tick. “We’ve become increasingly able to identify things that don’t seem quite right, areas where operations have become somewhat inefficient, or where the amount of work that doesn’t directly add value has increased,” he told reporters after the meeting. He said that now he is ready to address them.
The CEO pegged Toyota’s wide variety of models as being a driver of costs, and identified them as one possible place to cut. “If there are areas within those activities that aren’t truly value-adding work, or where work isn’t being done efficiently, then we need to take a closer look at them,” he said.
As the largest automaker in the world, it’s no surprise that companies under the Toyota Motor umbrella make a huge variety of vehicles. The gap between it and second-place Volkswagen Group is as many vehicles as BMW sells in a year, and look at how many models that brand has.
In the US, Toyota is the last remaining full-line car brand, and lists 32 different models if you separate hybrid and non-hybrid vehicles. Add Lexus and you have another 14. Globally, if you add Daihatsu and Hino and other global Toyota models, there are well over 100 different vehicles rolling out of Toyota factories.
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But those aren’t the real problem. Kon made it clear that it was the variety within the massive lineup. “If you go to a development division, you see issues such as an increasing number of different specifications and variants being created, which in turn is driving up costs,” he said.
Conflicting Goals Could Make For Some Interesting Conversations
Toyota EV Announcement 2023Toyota
The executive didn’t make it clear if he meant trimming multiple engines, hybrid and gas variants, or just trim grades like Toyota’s L and S variants that have different faces and interiors. Dropping some engines wouldn’t have a massive customer impact, but dropping vehicles like the GR Corolla would be a big deal for enthusiasts.
Speaking about the changes, Kon said, “honestly, there aren’t many that will be easy.” For whom they will be difficult or easy remains to be seen.
Kon has made it clear that he wants to keep “making ever-better cars,” an announcement that seems to conflict with his latest statements. The better cars comment was part of the company’s earnings announcement, where the CEO said that he planned a more diverse line of vehicles and to “increase the number of people who can build ever-better cars.”
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He also said that this year will see Toyota spend $10 billion on research and development. That’s a record figure for the automaker, and a curious move that seems contradictory to Kon’s most recent take on having too many cars.
CarBuzz Insight – Why This Matters:
Toyota GR Corolla 2026 UpdateToyota
When it comes to cutting costs, it’s normally the high-visibility, low-volume models that are the first targets. That would be the fun stuff – GR Supra, GR 86, and GR Corolla. But Toyota still has car-crazy Akio Toyoda as chair of the board, which gives those models protection.
More likely, Kon would cut variants. For example, the last-generation RAV4 offered 12 different engines depending on markets around the world, plus front- and all-wheel drive. The current version has cut that to six. Toyota could cut it further, and repeat that across its full line. That will impact choice, but won’t make much of a difference at your dealer in the US, where it is already all hybrid.
It could also mean fewer trim levels. The current Corolla offers six different trims in the US in sedan form, and there is very little difference between, for example, LE and SE, aside from an expensive new face. Cutting those could impact choice, but might help reduce costs. The company’s international models have many more opportunities for this type of cut.
Whatever the result, it will take a few years for the changes to show up in the product. In the meantime, Kon will be in the hot seat.
Sources: Toyota, Automotive News
