Toyota is fast recovering from last year’s Japanese earthquake and tsunami, a disaster that left it struggling for inventory for most of 2011.
And while the maker has suffered additional setbacks this year – including a boycott in China and its largest single recall ever due to a vehicle fire hazard – it is rapidly regaining momentum, global sales up 28% for the first nine months of 2012. That puts it ahead of General Motors and could let the Japanese giant the worldwide automotive sales crown it relinquished last year.
In all, Toyota sold 7.4 million vehicles behind January 1 and September 30. By comparison, General Motors sold just 6.95 million cars, trucks and crossovers during the same period, its own sales up a far more modest 2.5%.
Last year’s natural disaster was a significant and unexpected setback for all the Japanese makers, but it was a particularly embarrassing one for Toyota which had leapfrogged GM to become the global sales leader the year before the American maker declared Chapter 11 bankruptcy in 2009. Toyota also saw itself passed last year by Volkswagen AG – which has set its own goal of becoming the global automotive leader by 2018.
But Toyota’s strong resurgence this year suggests the maker isn’t about to surrender its crown long-term, at least not without a fight. It has had particularly good fortune in the critical American market where it last month saw sales surge by more than 48% as inventory levels returned to normal and product such as the updated Camry and all-new Prius C models helped lure in new buyers.
Officially, Toyota executives insist they are not focused on being number one – and industry analysts like Joe Phillippi, of AutoTrends Consulting, contend that’s a good thing. Many observers feel that the drive to beat GM during the last decade led Toyota to shift focus away from quality and reliability and resulted in the embarrassing safety recalls of 2009 and 2010 that resulted in record U.S. fines and an embarrassing appearance before Congress by Toyota chief Akio Toyoda.
The executive, the grandson of Toyota’s founder, assured lawmakers that he would shift focus back to safety and quality, but he has also outlined aggressive sales goals since then that would have Toyota come within a whisker of the 10 million mark for the first time this fiscal year – exceeding its 2007 all-time sales peak.
At least, that was the plan just a few months ago. The problem is that Toyota is counting on gaining ground not only in established markets like the U.S. and Europe but also in booming China – where it has lagged rivals like GM and VW, now that market’s leaders.
Chinese sales appeared on track to set a new record for Toyota this year – until that nation became embroiled in a bitter dispute with Japan over ownership of a chain of uninhabited islets in the South China Sea – known to the Chinese as the Daioyu and to Japanese as the Sendoku.
That triggered what appeared to be a government sanctioned, if not endorsed, series of protests last month that saw a Toyota dealership burned and many Japanese vehicles damaged or destroyed. That has since been followed by a boycott that resulted in Toyota sales last month falling by nearly half.
The maker has offered financial support to Chinese customers whose products were damaged – but Toyota has since been forced to slash production at its main assembly plant in China. It remains to be seen how long the boycott will play out. But Toyota has confirmed it no longer expects to sell 1 million vehicles in the Chinese market this year.
Complicating matters, Toyota this month ordered its biggest-ever recall which impacted 7.5 million vehicles worldwide and 2.5 million in the States. That’s on top of a smaller series of recalls earlier this year due to the same problem: a faulty master power window switch in the driver’s door that could result in a short-circuit and fire.
It remains to be seen if that will tarnish the reviving image of Toyota quality. Some analysts – including Rebecca Lindland, of IHS Automotive — believe the recall will have little impact on brand loyalists but could impact conquest business.
Volkswagen, meanwhile, has been gaining significant new business in both China and the U.S. this year – but it has been struggling in its home European market where economic woes have led to a collapse in car sales. VW has yet to report global sales numbers for the third quarter. It was in third place, however, for the first half of 2012.
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