Toyota's December Solid, But Annual Volume Down as U.S. Market Shifts

Toyota wraps up the year on a strong note, with December U.S. light-vehicle sales rising 5.8% on a daily-rated basis (one less day this year than last), according to WardsAuto data.

The performance still left the automaker in the red for the year, however, as overall volume fell 2.0% to 2,449,588, compared with 2,499,313 in 2015.

Some of that drop can be attributed to the phaseout of the Scion brand, which sold just 51,158 units in 2016, but the Lexus (down 3.9%) and Toyota (off 1.5%) marques also suffered declines despite an industry that will outpace year-ago.

The negative performances, executives say, are a result of the overall market shift toward light trucks and away from cars, which caught Toyota short of capacity and with gaps in its model lineup.

Industrywide, trucks accounted for a 60% mix of sales in 2016, Bill Fay, group vice president and Toyota Div. general manager, says on a conference call with reporters, with December skewing even higher away from the car sector. In contrast, the Toyota-brand mix ran 52% trucks, a healthy 4-point gain from 2015, but still far below the industry average.

Lexus was able to open up its utility-vehicle pipeline by midyear, with its mix at about 60% truck for the year after posting a strong 65% share in December, says Lexus General Manager Jeff Bracken.

Both executives see their brand’s mix continuing to shift in the direction of trucks. Toyota is in the midst of a $100 million capacity expansion of a plant in Mexico that will boost Tacoma pickup production 60,000 units annually, though that extra output isn’t expected to be available until late in 2017. Midyear it will add the C-HR small CUV to its portfolio, filling a critical white space in the lineup, and Fay forecasts availability of about 30,000 units for 2017.

“We made some outstanding progress (in 2016), especially with the support of our manufacturing team here in North America,” Fay tells WardsAuto. “There’s still a pretty significant (truck) gap. (But) our SUV business was up in December 27% year over year, so from a Toyota Div. standpoint, we’re very optimistic.

“We’re closing that gap and, because of investments in production in North America, we’re going to close that gap even more in the next year.”

Bracken says Lexus expects to start the year with a 50/50 product-availability mix, but ultimately sees that moving closer to a 60/40 truck/car split for 2017.

December saw a healthy 9.4% bump in Toyota-brand sales, while a successful seasonal ad campaign for Lexus drove that marque’s daily deliveries up 3.2%.

For Toyota, daily volume gains were centered on its truck lineup, with Highlander (63.8%), Land Cruiser (35.1%), RAV4 (21.1%), Sequoia (62.2%), Tacoma (5.6%) and Tundra (7.5%) all posting solid performances. Those models offset declines in volume-car models such as Camry (-7.1%), Corolla (-6.0%), Avalon (-9.9%) and Prius (-8.3%).

It was a similar story at Lexus, where results were driven by the RX (29.7%), NX (49.0%) and GX (15.5%).

Despite the sales push in December, Toyota’s overall average transaction prices rose to $32,190, up from $30,892 in November, according to Automotive Lease Guide. The automaker’s incentive spending declined 2.3% month to month, ALG says, and ran roughly $900 below the industry’s average of $3,673.

Executives put the emphasis on the automaker’s retail-market success in 2016, claiming continued leadership for the Toyota brand, luxury leadership by Lexus and touting Camry’s position as the best-selling car in America for the 15^th-straight year.

“We’re still a car company,” Fay notes. “Camry and Corolla had great years (and) that should continue.”

[email protected] @DavidZoia