Toyota Motor said on Thursday Takeshi Uchiyamada would resign from his post as chairman of the Board of Directors. Akio Toyoda would be appointed the new chairman and Koji Sato would replace him as the new president and chief executive officer from 1 April.

Sato (53) is currently chief branding officer and president of Lexus, Reuters reported.

Reuters said the timing of the announcement was a surprise.

Under Toyoda (66), who headed the company for more than a decade, the automaker has appeared reluctant to embrace electric vehicles, arguing the hybrid technology it pioneered with its once market leading Prius was a better fit for many drivers.

It also touted hydrogen-powered cars as the future, raising fears it would be left behind by the rise of electric vehicles.

That insistence on hybrids and hydrogen also prompted criticism from investors and environmental activists who once widely praised Toyota’s technology and emissions record.

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“No doubt Toyoda has been a competent CEO, but the whole auto sector needs to make disruptive change and Toyota has been lagging in this in our view, so this could be chance for a fresh start,” said Anders Schelde, chief investment officer of Danish pension fund AkademikerPension, which has repeatedly pressed Toyota to accelerate its shift to electric vehicles.

“We are hopeful this could help Toyota to set a new direction, but it remains to be seen.”

“The timing of this was a surprise,” said Seiji Sugiura, an analyst at Tokai Tokyo Research Institute told Reuters, noting there may have been a “sense of stagnation” inside the company given recent pressure on the share price.

“Probably, the day-to-day management will not change. Having Akio Toyoda step away from being CEO may increase his symbolism within the company and it may be hard for the young, new president to really show his hand.”

Toyoda reportedly said Sato’s mission would be to transform Toyota into a “mobility company,” without specifying what that would entail.

“The CEO needs youth, energy, strength,” Toyoda said, saying that he himself was now a “relic” of an older generation. In Sato, too, he said, he had chosen a fellow car aficionado.

Reuters said Toyoda described the hand-off as a “baton touch” in leadership, but the staged announcement event highlighted his continued central role. He turned from time to time to offer instruction and reminders to Sato.

Sato said Toyoda had offered him the CEO job at the end of the year when both were in Thailand for an event to celebrate Toyota’s 60th anniversary of operations there.

“I didn’t know how to respond,” Sato recalled. “I thought it was a joke.”

One Toyota executive, who asked not to be identified, told Reuters the automaker was headed for a period of “cloistered rule,” referring to the period in Japan’s history when a retired emperor continued to call the shots.

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

He has held positions as the president of Lexus International and Gazoo Racing Company, Toyota’s motorsport brand, since 2020. He also took on an executive role at Toyota and became its chief branding officer in January 2021.

Philip Craven, a Toyota director, said in a recorded video statement the board had reviewed and approved the succession plan put forward by Toyoda and the outgoing chairman, Takeshi Uchiyamada, Reuters added.