Toyota sales slide in Japan and China—what’s behind the decline?

Production dips and regional sales slumps in Japan and China weigh on the world’s largest automaker.

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Dec 3, 2024 - 10:10

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Toyota sales slide in Japan and China—what’s behind the decline?

Toyota, the world’s largest automaker, reported stagnant sales and declining production in October, underscoring the company’s struggles in its home market of Japan and its largest overseas market, China. While global sales, including subsidiaries Daihatsu and Hino Motors, inched up by 0.4% to 974,245 units—a record for October—overall production dropped 1.3% to 1.02 million units.

This marks a continued challenge for Toyota, which has been grappling with production setbacks and weakening demand in two key regions. Despite a 5.5% year-to-date sales increase in North America, a sharp 9% drop in China and a steep 20% decline in domestic Japanese sales since the start of the year have dragged down overall performance.

China's EV market pressures Japanese automakers

China’s automotive market, the largest in the world, has become increasingly dominated by domestic brands such as BYD, which have captured the EV boom with cost-effective and innovative offerings. Toyota’s production in China has struggled to keep pace, further exacerbating its sales decline.

A BYD 4S store is in Nanjing, Jiangsu province, China, on October 31, 2024.
NurPhoto/Getty Images

The rise of electric vehicles (EVs) in China has left Japanese automakers, who have traditionally focused on hybrid models, scrambling to adapt. Toyota’s slow pivot toward fully electric vehicles has placed it at a disadvantage against local competitors rapidly scaling up EV production.

Domestic challenges compound the problem

Back home in Japan, Toyota has faced a different set of challenges. Recalls, including issues with the popular Prius, have eroded consumer confidence, leading to a 13% production decline in Japan this year. Weak domestic demand for new cars has added fuel to the problem so far this year.

While Toyota has maintained its ¥4.3 trillion ($28.4 billion) annual profit outlook announced in November, the automaker's setbacks highlight the increasing difficulty of navigating the current market, both at home and abroad.

Competitors face similar headwinds

Toyota is far from alone in its current struggles. Honda reported a 16% drop in global production in October, driven by a staggering 46% decline in China. Meanwhile, Nissan saw a 6.3% dip in monthly output, with production down 15% in both the U.S. and China. Last month, Nissan announced plans to cut 9,000 jobs and slash manufacturing capacity by 20%.

News of Nissan’s deep cuts comes as the automaker scrambles to offset a 90% decline in operating profit in the first half of the fiscal year, down to $214 million. Even compared to its peers, Nissan is having a particularly difficult time navigating issues in its core markets of North America, China, and Japan.

Final thoughts

While Toyota’s global sales remain relatively steady, the company’s ability to address competitive and regulatory pressures in key markets will determine whether it can sustain its industry-leading position.

With Chinese brands capturing EV momentum and Japanese demand faltering, Toyota and its peers face a pivotal moment in adapting to a shifting market.

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admin As a sports enthusiast from the United States, my passion for sports goes beyond mere entertainment—it is a way of life. I am particularly drawn to the "Big Five" European football leagues: the English Premier League, La Liga, Serie A, Bundesliga, and Ligue 1.