Toyota’s Rising Pick-Up Truck Sales Could Pose A Threat To Detroit Automakers

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TM: Toyota Motor logo
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Toyota Motor

Toyota Motors  (NYSE:TM) has traditionally dominated the passenger cars segment in the U.S., with the Camry and Corolla being two of the highest selling cars in the segment. The Japanese automaker’s Prius Hybrid has also been the highest selling vehicle of the type. However, the company is now increasing its presence in the SUV, Crossover and Pick-Up truck segments. This is good news for investors as sales of passenger cars have declined in the U.S. for two years in a row while sales of the other three segments listed above have grown. In fact, Toyota’s strength in the SUV segment allowed it to over take BMW as the second highest selling luxury brand in the U.S. auto market, the biggest luxury car market in the world.

The pick-up truck segment is one of the most important in the U.S. auto market. Ford, GM and Fiat-Chrysler have dominated this segment with four of the highest selling trucks: F-150, Silverado, GMC Sierra and Dodge Ram. However, Toyota has now had the fifth and sixth highest selling trucks in this segment for two years running with Tacoma and Tundra. Sales of the former have grown by 15.8% and 6.7%, respectively, in the last two years. Even though combined sales of these two trucks are still less than half of the number of units sold by either Ford or GM, there is considerable potential for the company to grow its sales in this segment. If the company is able to do so, margins are likely to rise, given that pick-up trucks command higher unit prices yet cost less to manufacture.  Toyota already boasts some of the highest operating margins in the auto market.

tm trucks

 

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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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