Toyota ended 2023 looking like it had figured things out. The Japanese carmaker ended the year as the world’s top selling carmaker, with 11.2 million vehicles sold across all of its companies.
Unlike its struggling competitors in Japan, the U.S., and Europe, Toyota looked like it was succeeding in a changing car market, hit by macroeconomic headwinds, new competition from China, and an expensive transition to EVs. Toyota shrugged off investor complaints about its slow transition to battery electric vehicles, and instead made a successful bet on hybrids, more suited to markets like the U.S.
But Toyota’s success is starting to stall. In September, Toyota’s overall sales declined 7.4% year on year. Total sales for 2024 thus far are down 1.9% year on year to reach 7.4 million vehicles, the company revealed Wednesday.
Toyota’s sales in Japan, its home market, fell 6.3% year on year in September, adding to a 16.9% year on year decline for the first nine months of the year. Toyota blamed domestic recalls of its Prius hybrid, as well as suspended production of three of its models: the Yaris Cross, Corolla Axio, and Corolla Fielder.
The suspensions are tied to revelations earlier this year that Toyota, alongside several other Japanese automakers, submitted faulty safety testing data to authorities, including for pedestrian safety and collision safety tests. Manufacturing of the affected models stopped in June only resumed in early September.
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It’s the latest scandal involving faulty data to hit Toyota. In December 2023, Toyota halted production at its compact-car maker Daihatsu after a safety investigation uncovered over 170 irregularities in 64 models that reached as far back as 1989.
Toyota is also struggling in China, the world’s largest auto market. Toyota’s sales in China fell 9.2% year on year in September, which the company blamed on increased price competition.
Chinese consumers are turning toward domestic brands, particularly in electric vehicles. Local carmakers are engaged in a fierce price war, driving down margins across the industry. Foreign carmakers like Volkswagen and GM, which once dominated China’s car sector, are now reporting major declines in China sales.
Toyota in the U.S.
Toyota even struggled in the U.S., which has been a bright spot for the company for much of the year. Toyota’s U.S. sales are still up 6.2% year on year for 2024 thus far. Yet the carmaker’s U.S. sales fell 20.3% in September compared with a year ago, which it blamed on recalls and Hurricane Helene.
The company’s hybrids are doing well in the U.S., where battery electric vehicles are less popular owing to cost and a lack of charging infrastructure.
Toyota has been skeptical of a rapid shift toward battery electric vehicles, instead promoting hybrids as a transitional step. That decision has proved prescient as competitors scale back their EV plans owing to slow consumer adoption. Toyota’s global hybrid sales now total almost 3 million units for the year thus far, a 19.8% year-on-year increase.
