Toyota: U.S. Auto Market "Very, Very Healthy"

Timothy Cain
by Timothy Cain
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toyota u s auto market very very healthy

Toyota Motor North America’s executive vice president for sales, Bob Carter, is not ready to rain down doom and gloom on the state of the U.S. auto market.

From Toyota’s perspective, even the July results — 2017’s seventh consecutive month of decline, and the worst decline yet — didn’t represent the end of the American auto industry as we know it. In fact, total Toyota/Lexus U.S. volume actually increased 4 percent despite a shorter sales month than in July 2016.

While aware of the overall climate, in which Toyota sales are down more than 2 percent this year, Toyota’s U.S. sales boss says he’s “energized,” according to Automotive News. “The industry is not at a pace where it was in 2016 — we didn’t expect it to be at the pace of 2016,” Carter says, “but it’s still very healthy.”

And not without good reason.

For the market as a whole, the U.S. auto industry’s 3-percent year-to-date slide through the end of July is almost wholly caused by a sharp downturn in passenger car sales. But that 12-percent drop in car volume — equal to 510,000 fewer sales in the first seven months of 2017 compared with the same period one year ago — is partly offset by a 220,000-unit improvement in light truck volume.

More profitable light truck volume.

As an example, the rapidly shrinking midsize sedan segment has lost more than 230,000 sales so far this year, sales of cars with average transaction prices falling in July to $24,852, according to Kelley Blue Book. Sales of compact and subcompact crossovers, however, rose by more than 90,000 units at average transaction prices in July of $28,415 and $24,478, respectively.

In Toyota’s July sales picture, more specifically, passenger car volume slid by nearly 12,000 sales last month, a loss incurred largely by the Prius family and the Corolla sedan. But while Toyota lost those sales, it added nearly 20,000 light truck sales, boosted by an all-time record high of 41,804 RAV4 sales, a 13-percent uptick in Lexus utility vehicle volume, rising pickup truck sales, the Highlander’s 13th consecutive monthly improvement, and the 4Runner’s eighth consecutive monthly improvement.

Those are not troubling figures for Toyota.

As a result, Toyota’s Carter disagrees with the idea that “U.S. car sales crumbled” in July, instead saying that, “We’re not on a sleigh ride down.” A plateau over the next 24 to 36 months with annual sales above 16 million units, Carter says, is good for dealers, customers, and OEMs.

Yes, auto sales are falling. But that fall is in comparison with record high levels in 2016. Never before had auto sales been so numerous. Moreover, numerous automakers are attempting to severely limit their fleet volume — GM, Ford, and FCA reported a total loss of 75,761 sales in July but “only” 46,175 fewer retail sales. A first glance suggests an apparent nosedive, but there’s more to the story.

Inventory concerns remain at some automakers, though Toyota entered July with far less supply than the industry average. The average per-vehicle incentive spend in July rose 5 percent, year-over-year, across the industry, although Toyota/Lexus was 28-percent below the industry average at $2,550, according to TrueCar. And the industry is still faced with numerous car-heavy lineups. Indeed, Toyota’s major 2017 launch is of the 2018 Toyota Camry — a midsize car in a compact crossover world.

Toyota still feels positive about the Camry’s opportunity. “We’re starting to see innovative products and investment coming to passenger cars for the first time in years,” Carter tells Automotive News. “Through these investments, I do believe we will see some stabilization of the midsize sedan market.”

It’s unlikely that you’ll find anybody, one year from now, describing America’s midsize sedan market as “very, very healthy.”

[Images: Toyota]

Timothy Cain is a contributing analyst at The Truth About Cars and and the founder and former editor of Follow on Twitter @timcaincars.

Timothy Cain
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  • Thelaine Thelaine on Aug 03, 2017

    Toyota has every reason to be optimistic. They have built a great reputation for reliability and durability.

  • Zip89123 Zip89123 on Aug 03, 2017

    I'm glad Toyota is happy. I'd be happy driving a new Toyota too, but due to Toyota's poor option packaging on new vehicles I bought a Ford instead. No regrets. Maybe next time Toyota will listen to its customers.

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