By Doron Levin, contributor
FORTUNE — Any doubts Toyota Motor Corp. is rebounding were erased by its latest earnings report, which arrived on top of large market-share gains in the U.S. That was cause for Toyota investors to cheer. Even better? Much of the gain was made possible by the Camry’s dominance of the family sedan segment.
Toyota (TM) on Nov. 5 announced second-quarter fiscal profit of $3.2 billion, more than triple last year’s total, and elevated its forecast for annual profit by 2.6 percent to $9.7 billion. Results were especially impressive given difficulties for Toyota and other Japanese automakers in China, where tension over disputed islands caused a consumer boycott of vehicles by Japanese automakers in the last quarter.
In the U.S., by contrast, Toyota is returning to previous form, tracking at 14.4% share of all U.S. light vehicles, up nearly two points from this time last year — an increase representing nearly 300,000 additional vehicle sales on an annual basis. Plagued by bad fortune two years in the form of a tsunami in Japan on top of quality issues in the U.S., Toyota’s fortunes have been rising with a growing U.S. automotive market.
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Luckily for the company, the Camrys on lots are of an all-new variety that debuted a year ago during a lull among introductions and production ramp-ups of competitive family sedan models. Michelle Krebs, analyst for Edmunds.com, an automotive website, noted that Toyota also has provided 0-interest financing and subsidized leases. “Toyota is trying to make hay while the sun shines,” said Krebs, noting that the new Nissan (NSANY) Altima is in an early stage of production, as is Ford’s (F) new Fusion and Chevrolet’s (GM) Malibu.
The Camry was the top-selling car in the U.S. through October with sales of 344,714 units, a gain of 37% from last year, well ahead of No. 2, the Honda Accord, with sales of 276,196. And while top-selling luxury brands BMW and Mercedes have lost share of market in the U.S., Toyota’s Lexus luxury unit has been gaining.
The Camry was a phenomenon of functionality and high quality when it debuted in the U.S. in the mid 1980s. Praised by consumer groups, the model often has been disparaged by enthusiasts as “boring” and “stodgy.” For the latest generation, Toyota tried to create an enhanced SE version aimed at younger buyers with sportier tastes. With NASCAR driver Kyle Busch featured in advertising for the model, the sportier version now accounts for 40$ of sales, compared with 11% during the previous model year, the company says.
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With General Motors and Ford both giving up market share of the U.S. in favor of profitability, Toyota again should contend as the global volume leader, even in light of the recent troubles in China. Given Toyota’s powerful balance sheet and the strength of Japan’s yen, the automaker is in good shape to expand global production.“From an image point of view Camry has evolved quite a bit,” said Steven Curtis, a Toyota spokesman in a prepared statement. He said company research shows that buyers view their cars as “sporty,” among other attributes. Sales of the model are expected to reach 400,000 this year, 11% ahead of forecast, he said — which would make Camry the best-selling passenger car in the U.S. 15 out of the past 16 years.
But the road to No. 1 puts Toyota on a collision course with Volkwagen AG — another strongly-financed behemoth staffed with brilliant engineers that has ambitions for global domination.
