Toyota Motor’s global sales dropped 7% in February compared to the previous year1. Toyota’s sales decline is influenced by regional factors, safety scandals, and market dynamics.
However, the company continues to invest in its transformation toward electrification and sustainable growth.
Key Factors
China: A heavy decline in China due to Lunar Year holidays impacted sales significantly. China’s auto market is also engaged in a cut-throat price war, affecting performance.
Japan: A safety test scandal at its small car unit led to a slump in Japan.
Daihatsu: Production stoppages at Daihatsu (which makes some Toyota brand cars) affected domestic sales. Daihatsu had previously admitted to rigging collision safety tests.
Hybrids: Almost two-fifths of the vehicles sold by the Japanese car maker in February were gasoline-electric hybrids.
Despite these challenges, the company’s US sales surged 16%, and Europe sales gained 14%2.
Toyota Profit Decline Forecast for FY2025
Toyota forecasts a 20% profit decline in the current financial year (FY2025).
Reasons behind this decline are:
- Investments: It plans to invest in “human capital,” including support for labor costs of suppliers and dealers, as well as investments for its multi-pathway strategy (hybrids, plug-in hybrids, and EVs).
- Transformation: It aims to transform into a mobility company, focusing on electrification and hiring.
- China Challenges: It faces competition from local manufacturers rolling out software-loaded electric vehicles in China.
Despite this, Toyota delivered blockbuster fourth-quarter results in FY2024.
Hybrid Sales and EV Strategy
The company’s traditional strength lies in petrol-electric hybrids. Battery-only EVs made up only 1% of global sales in the previous year, well below their target. Toyota expects to sell 171,000 battery EVs in the current financial year3.
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