Akio Toyoda, the grandson of Toyota Motor Corp's founder and the company's next president, will confront a challenge largely unknown to his ancestors: decline.

Toyoda will succeed Katsuaki Watanabe as president of Toyota this year, people familiar with the plan have said.

He will take over as the carmaker's two largest markets, the US and Japan, are plummeting, forcing Toyota to reduce inventories by halting production. The company plans to slash about 5,000 temporary workers in the two countries in the face of the first operating loss in 71 years.