Print options

March 08, 2010

Decline in Toyota Sales Gives Rivals Boost

by Mil Arcega

U.S. sales of Toyota vehicles declined nearly 9 percent in February, the first full month since the Japanese automaker suspended sales and recalled 8.5 million cars for accelerator problems.  Although the concerns about the safety of Toyota's vehicles are likely to benefit Toyota's rivals, analysts say when the dust finally settles, Toyota, the world's largest automaker is likely to remain just that.

Despite one of the largest auto recalls in history, several congressional hearings, and more than 50 accidental deaths linked to sudden acceleration - Toyota still managed to beat sales expectations.

Jessica Caldwell is senior analyst at online auto advisor, Edmunds.com:

"The truth of the matter is, they're still the third largest automaker in terms of volume in the United States," said Jessica Caldwell.

Instead of the double digit declines many were expecting, Toyota sold more than 100,000 vehicles in the U.S. last month, only about nine thousand fewer than for the same period last year.

But with pent-up demand expected to boost worldwide sales in 2010, Toyota's problems have been a boon for rivals.  

U.S.-based Ford saw a 43 percent surge in February.

"As soon as the news about the recall hit, we saw a lot of interest in Ford, which isn't necessarily a natural competitor for Toyota," she said. "I would say that the other two big winners were Honda, obviously, that's Toyota's natural competitor and also Hyundai, the Korean automaker that has done a lot in the past year and has really benefited from Toyota's misstep."

"This is as bad as it gets for an auto company," said Clarence Ditlow.

Auto safety expert Clarence Ditlow says Toyota's missteps have been costly because it waited too long to act.

"It's not a lost cause but its an uphill battle," he said. "Toyota has to bat a thousand [be perfect] for the next year."
 
While many questions remain about the exact cause of the acceleration problems that led to worldwide recalls, Caldwell expects Toyota sales will rebound.

She says the Japanese automaker has already launched an aggressive campaign to regain lost business.  

It is also positioning itself to play a larger role in China.

"I think everyone is clamoring for dominance in China so I think everyone sees that as really a crucial market, the next big market out there," said Caldwell. "So of course whatever happens in China is really going to affect what these automakers do on a global scale."

Total vehicle sales in China soared 45 percent last year, overtaking the U.S. as the world's biggest auto market.

Although Toyota hopes to expand sales in China to 800,000 vehicles this year, it continues to lag behind the competition.  

General Motors, for example, sold nearly two million vehicles in China last year.