When Kenta Kon became CEO of Toyota on April 1, he inherited a company at the top of the global automotive market. Toyota has led worldwide car sales for six consecutive years, moving more than 10.5 million vehicles in the past year alone, a figure that includes its premium brand, Lexus. Separately, Toyota Group sales in 2025 were reported at about 11.3 million vehicles when Daihatsu and Hino are included; the broader total reflects a different reporting scope. Behind those figures, Kon has identified a growing problem: the sheer volume of models and variants is straining the company’s resources and threatening future profitability.
Efficiency Under Pressure
In his first months at the helm, Kon has taken a clear-eyed look at Toyota’s internal challenges. During visits to the company’s R&D centers, he found engineering teams stretched thin, juggling an expanding range of models and their specifications and configurations. He argues that this complexity is driving up costs and slowing development cycles. “If you visit a development department, you see issues like the increasing number of models, specifications, and variants, which in turn raises costs,” Kon said. He has called for a thorough review of activities that add little real value or could be streamlined to improve efficiency.
Last year’s 3.7% growth in global sales came from higher volumes, not increased profit margins per vehicle. For Kon, that is a warning sign. He believes a smaller product portfolio would ease the burden on engineers and help Toyota maintain its competitive edge as the industry evolves. The wider group’s scale also comes with a varied powertrain mix: reported 2025 sales included about 4.4 million hybrids and 199,100 battery-electric vehicles.
First Cuts and Strategic Shifts
The first signs of this new approach are already visible. Toyota has decided to halt plans for the Lexus LF-ZC, a luxury electric sedan slated for launch in the coming years. Unveiled as a four-seat battery-electric concept at the 2023 Japan Mobility Show, the LF-ZC measured about 4,750 mm long, 1,880 mm wide and 1,390 mm high, with a 2,890 mm wheelbase. Lexus targeted a drag coefficient below 0.20. The decision, attributed to fluctuating demand and the heavy development workload, signals a willingness to make tough choices when a model’s sales potential does not justify the investment.
The program’s end does not mean all of its engineering work is being discarded. Toyota Chief Technology Officer and Executive Vice President Hiroki Nakajima described the transition as handing the “baton” to a subsequent model, with LF-ZC technologies intended to carry forward. The newer Lexus ES has also been linked to design cues from the concept. Toyota’s broader EV plans include a wholly owned Lexus battery-electric vehicle plant in Shanghai, announced in February 2025, with planned initial annual capacity of 100,000 vehicles and production scheduled to begin in 2027. The estimated project value is $2 billion, and the facility is expected to use in-house gigacasting technology.
Toyota has not specified which other vehicles or variants might be cut, but the message is clear: the company is reassessing an expanding lineup. Its aim is to focus on models and configurations that deliver clear value and operational efficiency, while carrying useful technologies into future vehicles.
Hybrid Focus, Multi-Energy Commitment
Kon’s strategy does not mean abandoning new idea. He has reaffirmed Toyota’s commitment to hybrid technology, which remains central to the brand’s identity and market success. Plans are underway to increase hybrid production capacity, reflecting continued strong demand for these vehicles. The group’s reported 2025 hybrid sales, about 4.4 million, show the scale of that business, while its battery-electric sales confirm that BEVs remain part of a broader product mix.
At the same time, Toyota will maintain its multi-energy approach, offering gasoline vehicles and conventional hybrids, alongside plug-in hybrids, some diesel options and electric vehicles. Kon has made it clear that the company will not “slam on the brakes” when it comes to diverse powertrains, resisting the industry rush to go all-in on electric cars.
This stance echoes the perspective of Akio Toyoda, chairman of the board, who earlier this year predicted that electric vehicles would never account for more than 30% of the global market. While Toyoda has since acknowledged the accelerating shift toward electrification, Toyota’s leadership remains cautious about abandoning internal combustion engines entirely.
In The Future
Toyota’s move to simplify its lineup comes as the automotive industry faces mounting pressure to adapt to new technologies and changing consumer preferences. By focusing on efficiency and strategic clarity, Kon aims to ground Toyota’s dominance in more than scale, with smarter, sustainable management. The LF-ZC’s successor technologies and the planned Shanghai BEV plant show that the company continues to invest in electrification even as it reshapes individual vehicle programs.
