Strong SUV Sales Not Enough To Offset Decline In Car Sales For Toyota
Toyota Motors (NYSE:TM) has been impacted the declining sales of passenger cars in the U.S. car market. The passenger car market has traditionally been the strongest segment for the Japanese auto maker but in 2016 sales of the segment have declined by over 8% through August compared to sales over the same period in 2015. Overall sales in the U.S. car market have been flat largely because of a strong crossover segment. Toyota has benefited from the boom in the light truck segment- that includes pick-up trucks, minivans, commercial vans, SUVs and Crossovers.
However, the gain from these segments won’t be enough to offset the decline in the passenger car market for the company. As the tables above show, Toyota gets close to half of its sales from the passenger cars segment. Moreover, most of the production for these vehicles is based domestically in the U.S., thereby making a decline even more unprofitable. In contrast, despite the 15% year-over-year increase in sales of the crossover SUV RAV4 and 7.3% increase in sales of the hybrid SUV Highlander, overall truck sales have grown by only 4.7%, not nearly enough to offset the decline in car sales.
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Toyota Motor
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