By Eric Pfanner And John D. Stoll
Toyota Motor Corp. retained its crown as the world's largest car
company by sales in 2014, but an expected slowdown in its home
market is expected to boost the Japanese auto giant's reliance on
U.S. car buyers this year.
Toyota sold 10.23 million vehicles in 2014, up 3%, placing it
slightly ahead of Volkswagen AG's 10.14 million in sales and in
front of General Motors Co. Long the global auto-sales leader, GM
sold 9.92 million vehicles last year.
The Japanese auto maker expects a 1% sales decline in 2015 due
to soft conditions in Japan, where tax changes have affected
demand. Analysts, including IHS Automotive, expect the decline to
allow Volkswagen to pass Toyota this year, achieving its goal of
being No.1.
Even as Volkswagen and Toyota are neck-and-neck in global
volume, the two are miles apart when it comes to reliance on the
U.S. market. In 2014, Toyota sold 50,000 more vehicles in the U.S.
than it did in Japan, and dependence on American car buyers likely
will grow this year due to the Japanese slump, weakness in Europe
and South America, and the continued strength of the U.S.
light-vehicle market.
Toyota expects sales to fall 1% globally, with a 9% decline in
Japan entirely offsetting a 2% increase seen for the rest of the
world. Global auto sales growth is being largely fuelled by the
U.S. market and this is leading a large portion of the global auto
industry to increase investment in North American manufacturing
capacity and in the development of trucks and SUVs.
Nearly 25% of Toyota's sales, including its Lexus luxury-car
brand, are in the U.S. and the reliance has grown steadily over the
past three years. Volkswagen, meanwhile, relies on the U.S. market
for only about 5% of its global volume, including its Audi and
other luxury brands.
Volkswagen has struggled to grow in the U.S., although it has
ambitious plans to stage a revival over the balance of the decade.
A new crossover sport-utility vehicle, for instance, is in the
works.
For now, however, VW's growth engine is China, which is facing a
slowdown. The Chinese market is still expected to grow at a rate of
as much as 8% over 2014, at least double the expected pace of the
U.S. "My guess is that at some point VW does pass Toyota, simply
because VW is a lot bigger than Toyota in China," said Christopher
Richter, an analyst at brokerage CLSA. Toyota sales include its
Lexus, Daihatsu and Hino brands.
Volkswagen sales in China rose 12% to 3.68 million vehicles in
2014, slightly ahead of GM's China volumes. Toyota, meanwhile sold
just over one million cars.
Other markets where Volkswagen is strong, such as Brazil, also
have struggled, while Southeast Asia, where Toyota is bigger, have
been volatile.
Auto makers, including GM, have said North America is currently
among the most attractive growth markets in the world. The Detroit
auto maker sees volume touching as high as 17 million in the U.S.
this year, but that growth doesn't come without risks.
For instance, a plunge in the price of oil has revived demand
for pickup trucks and SUVs in the U.S. These vehicles are more
profitable than more fuel-efficient cars or hybrids, but Toyota's
sales could be held back by limits on its ability to ramp up
production, Mr. Richter said.
Under President Akio Toyoda, who took over in 2009, Toyota has
prioritized profitability over sales growth, after an expansionary
phase resulted in overcapacity. Mr. Toyoda has pledged not to build
any new plants before 2016.
It is also getting more costly to do business in the U.S.
Autodata, an automotive information supplier, estimates Toyota's
incentive spending rose 10.3% in 2014, and the auto maker spent an
average of $2,000 in discounts and rebates on each of the vehicles
it sold, reflecting a steady rise among the three largest Japanese
auto makers in the U.S.
Yoko
Kubota
contributed to this article.
Write to Eric Pfanner at eric.pfanner@wsj.com
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