Toyota's global sales stumble again in July as challenges persist

Toyota’s successes have taken a pause in recent months as a series of safety scandals and an increasingly competitive overseas market put a dent in the brand’s reputation.

Driving the news: Toyota’s monthly sales and production fell throughout the first half of the year, a trend that seems to be continuing into the third quarter based on July numbers.

• The automaker’s global production total fell 0.6% year-over-year. That’s a much smaller decline compared to previous losses but still represents the brand’s sixth drop in a row since February.

• Worldwide sales declined only 0.2%, but one key market saw notably worse results than normal.

• While demand for Toyota products has been on the decline in China for several years due to increased competition with domestic brands, U.S. sales were surprisingly weaker this July, falling 5%.

Zooming in: Toyota attributed the decline to last month’s fewer selling days compared to 2023. The sales disruption was also exacerbated by an airbag issue, which put Grand Highlander and Lexus TX production and sales on hold. Other factors could be at play, however.

• In June, company chairman Akio Toyoda apologized for a series of scandals that involved cheating on safety certifications for multiple models.

• Toyota was found to have used fraudulent data on a range of examinations, including collision and airbag safety tests.

• It’s hard to say whether Toyota’s controversies have had an impact on its performance, although it seems plausible given that much of its success hinges on the reputed quality of its products.

Zooming out: At the same time, it seems strange for the company’s sales to be declining when its product mix has arguably never been better.

• The automaker has become one of the top hybrid manufacturers in the world, selling 473,000 in the U.S. alone between January and June.

• Toyota also saw profits improve during the second quarter, although the increase was only slight.

Bottom line: Whatever the reason, Toyota is clearly facing problems, challenging its narrative of continued growth. While it remains the world’s best-selling automaker, fixing those issues is paramount to its long-term success.

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