Why Toyota Should Be Worried About The U.S. Car Market
Toyota Motors (NYSE:TM) has seen its U.S. sales decline by 9.1% so far this year compared to sales over the same period last year. While overall auto sales in the U.S. have declined, the industry-wide decline of 1.5% is much smaller than Toyota’s decline. The primary reason behind Toyota’s massive fall is the poor performance of passenger vehicles in the U.S.
Breaking down the Japanese auto maker’s performance by segment, this fact is visible clearly. Passenger vehicle sales declined by 7.2% in the month of February. This decline was large enough to offset the 2.6% gain in light truck sales and the 14% gain made in SUV sales by the company. All four of Toyota’s flagship vehicles — Corolla, Camry, Avalon and Prius — experienced double digit declines on a year-over-year basis.
Given Toyota’s heavy dependence on the passenger vehicle market, the overall trend in the U.S. car market is worrisome. Breaking down industry-wide sales by segment, car sales declined by 12.1% while light truck and SUV sales increased by 6.4%. This resulted in an overall decline of 1.5%. This clearly hints that Toyota needs to either revive the sales of its flagship sedans or increase its strength in the light-truck and SUV segments. Without progress in either of these areas, the company could continue to struggle in the U.S.
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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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