Why Toyota Should Be Worried About The U.S. Car Market

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TM: Toyota Motor logo
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Toyota Motor

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.

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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.

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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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