Toyota Clings to Global Sales Lead Over Volkswagen

Toyota Motor Corp. (7203) hung onto a slim global sales lead over Volkswagen AG (VOW) in the year’s first six months as rising U.S. demand for SUVs paced a first-half record.

Deliveries for Toyota, including its Hino Motors Ltd. (7205) and Daihatsu Motor Co. units, climbed 3.8 percent to 5.1 million vehicles in the first half, according to a company statement. By comparison, Volkswagen has reported sales of about 5.07 million units, including results for its heavy-truck units.

Japan’s largest listed company has benefited from U.S. buyers’ desire to drive sport utility vehicles, which are on pace to outsell sedans in the market for the first time. Rising deliveries of the new Toyota Highlander and Lexus GX drove U.S. market share gains as Volkswagen posted sales declines and pledged to introduce a mid-size SUV in 2016.

“They’ve gotten so good at building products that really hit with customers,” said Jim Press, a former U.S. sales chief and 37-year Toyota veteran who now consults for the Renault-Nissan alliance. “Contrast that to Volkswagen: they don’t have this market figured out. They’ve failed to succeed in North America because they don’t really understand it.”

Even so, Volkswagen is closing the gap with Toyota. The German automaker reported about 2.57 million deliveries for the April-to-June period, excluding results for its MAN SE and Scania AB units, which topped Toyota’s 2.51 million vehicles sold in the quarter.

Photographer: Daniel Acker/Bloomberg

Japan’s largest listed company has gained from U.S. buyers’ desire to drive sport utility vehicles, which are on pace to outsell sedans in the market for the first time. Close

Japan’s largest listed company has gained from U.S. buyers’ desire to drive sport... Read More

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Photographer: Daniel Acker/Bloomberg

Japan’s largest listed company has gained from U.S. buyers’ desire to drive sport utility vehicles, which are on pace to outsell sedans in the market for the first time.

Both companies remain ahead of General Motors Co. (GM) after the first six months of the year.

GM Results

Worldwide deliveries for GM, the largest U.S. automaker increased 1.4 percent to 4.92 million cars and trucks, as rising sales in China and the U.S. helped offset declines in Europe and South America.

Consumer demand for GM vehicles held up even as the Detroit-based company called back almost 29 million vehicles in North America this year. Chief Executive Officer Mary Barra led GM through an unprecedented pace of recalls after February, when the automaker began fixing compact cars with potentially faulty ignition switches linked to at least 13 deaths.

Volkswagen beat Toyota during the second quarter as the aging Prius hybrid paced declining deliveries in Japan after a government tax hike took effect April 1.

Prius fell to third place among Japan’s top-selling models in the first half after leading the industry in the year-earlier period. The model’s slump contributed to the Toyota City, Japan-based carmaker posting wider sales declines than the total industry after Japan’s first consumer levy increase in 17 years.

Photographer: Jin Lee/Bloomberg

In the U.S., sales of the Highlander SUV surged 17 percent this year through June. Close

In the U.S., sales of the Highlander SUV surged 17 percent this year through June.

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Photographer: Jin Lee/Bloomberg

In the U.S., sales of the Highlander SUV surged 17 percent this year through June.

Surprising Result

“The result was surprising,” Yoshiaki Kawano, a Tokyo-based analyst for IHS automotive, said of Toyota finishing ahead of Volkswagen after the first six months. “The negative effect from the rising tax rate wasn’t as big as we assumed. Their sales should be aided by the U.S., where the economy is good and consumer’s tastes are shifting from traditional sedans to pickup trucks and SUVs.”

In the U.S., deliveries of Toyota’s Highlander SUV surged 17 percent this year through June, while sales of the RAV4 crossover climbed 15 percent. The automaker also more than doubled deliveries of its refreshed Lexus GX SUV.

Including more fuel-efficient, car-like crossover models, SUVs accounted for 36.5 percent of U.S. new-vehicle registrations this year through May, compared with 35.4 percent for sedans, researcher IHS Automotive said this month. Sedans, which held the top spot for decades, had led 36.6 percent to 33.9 percent a year earlier.

SUV Advantage

Toyota and Lexus SUV models outsold Volkswagen and Audi by 7-to-1 in the U.S. this year through June, according to researcher Autodata Corp. To revive flagging sales in the world’s second-largest auto market, the Wolfsburg, Germany-based company plans to add a seven-seat SUV to its lineup in 2016 and build the model at its Tennessee factory.

Toyota and Volkswagen both have forecast more than 10 million deliveries for 2014. Toyota sold 9.98 million vehicles last year to lead the industry for the second consecutive year, followed by Volkswagen’s 9.73 million and GM’s 9.71 million.

Introductions of crucial revamped models by Toyota and Volkswagen will help determine which automaker finishes the year on top.

Toyota plans to begin selling a reworked Camry with more contoured body panels and an updated interior in the third quarter to deliver a boost to the top-selling car in the U.S. for the last dozen years. The Camry widened its lead in the market over Honda’s Accord, Nissan’s Altima and Ford (F) Motor Co.’s Fusion during the first half, posting a 7.2 percent gain.

New Passat

The Passat, Volkswagen’s best-selling sedan, will in the fourth quarter become the company’s first car available with a head-up display that projects speed and navigation information above the steering wheel. Volkswagen is seeking to reclaim its lead in Europe’s sedan market after Passat fell behind Bayerische Motoren Werke AG’s 3-Series last year.

Volkswagen and Toyota both outpaced industry growth during the first half of the year in Europe, where automakers have posted 10 consecutive months of sales gains, the longest stretch in four years. Car demand is recovering from a two-decade low reached in 2013, with registrations rising 7.1 percent for Volkswagen and 6.8 percent for Toyota, according to the European Automobile Manufacturer’s Association.

In China -- Volkswagen and GM’s largest market -- passenger-vehicle deliveries climbed 11 percent to 9.6 million in the first six months of the year, the China Association of Automobile Manufacturers said this month. The state-backed group forecast vehicle-sales growth will slow to 8.3 percent, down from its January projection of 10 percent. The market expanded by 14 percent last year and surpassed 20 million, a record for any country in a single year.

China Sales

Volkswagen’s deliveries in China, including Hong Kong, rose 18 percent to more than 1.8 million, topping GM’s 11 percent increase to 1.73 million. Toyota, which fell behind Ford in China last year, boosted sales by 12 percent to 465,900, according to the company.

Chief Executive Officer Martin Winterkorn said Volkswagen will build two more plants in China, increasing the company’s total investment there to more than 20 billion euros ($27 billion). GM plans to spend $12 billion through 2017 as part of plans to add to its lineup and expand production capacity in the country by 65 percent by the end of the decade.

To contact the reporters on this story: Craig Trudell in Tokyo at ctrudell1@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net Chua Kong Ho

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