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Toyota Back On Top

In 2011, Toyota Motor Corp, lost it’s spot at the top of global auto sales for the first time in several years. There were many reasons that leading up to the company’s fall from number one: from multiple safety recalls(remember the sticking accelerators?) to the twin disasters that befell Japan. All of those concerns have gone by the wayside as Toyota posted a 27 percent sales increase,  which helped propel the company to sales that topped 9.75 million globally in 2012.

Toyota unleashed a strategy in common with many of its Japanese rivals to help it recover; larger incentives while cutting into the amount of profit per vehicle the company allowed each dealership to take. Some dealers claimed that their new car sales had jumped by as much as 25 percent year over year from 2011, but their profit had not increased by a single penny because of the cuts demanded by Toyota. The strategy worked. Toyota’s sales in the U.S. jumped to 2. million vehicles in 2012, the largest volume since 2008. The sales gains were driven by high purchase numbers for the Prius, Camry, and Lexus Rx-350 SUV. Honda Motors used the same strategy and saw sales rise by 24 percent over the same period. Ford and GM scaled back their incentives and saw sales nearly stagnate.

Toyota expects to remain on top in 2013, but admits that sales increases in double digits are unrealistic. The company has caught up on the backlog of orders that built up after the earthquake and tsunami hit the island nation. The automaker is forecasting sales in the neighborhood of 9.91 million units, which should keep in on top globally. Additionally, a weakening yen against the American dollar should bode well for company’s profit margin. The weak yen makes Japanese exports to dollar dominated markets more profitable and competitive.

There is still good news for American automakers. Profits are back! All of the Big Three are set to post profits for 2012. Ford Motors is leading the way with the highest profit margin, even increasing its dividend. Chrysler, despite its line-up of underpowered and cheaply designed vehicles, will post a profit in the neighborhood of $1.5 billion. These profits are translating into more than a dividend for investors. All three are hiring workers and paying gain-sharing checks and GM has announced that it will be investing over $600 million to upgrade an assembly plant in Kansas. Looks like good news all around in the automotive industry.

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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