Toyota posts rare sales drop in November, dragged down by China

A Toyota Motor dealership in Beijing. (Courtesy: Bloomberg)

Toyota Motor Corp.’s sales and production fell in November, weighed down in large part by a sharp drop in China as the country discontinues subsidies meant to boost the sales of electric and fuel-efficient cars.

Global sales — including at subsidiaries Daihatsu Motor Co. and Hino Motors Ltd. — fell 1.9% in the period from a year earlier to 965,919 units, the Japanese carmaker said Thursday. Production shrank 3.4% to 934,001 vehicles.

Global automakers are facing greater uncertainty as they navigate an environment of trade tensions, regulatory changes and uncertain economic outlooks. Toyota’s results serve as a barometer for the industry’s struggle to balance strong long-term demand with short-term economic and policy headwinds.

Toyota and Lexus brand sales in China fell 12% in November, the company said, citing the end of trade-in subsidies in major cities as funds ran dry. The figures were released against a backdrop of diplomatic tensions that have been brewing between China and Japan since November, when Prime Minister Sanae Takaichi made remarks about Taiwan that angered Asia’s biggest economy. China responded by warning its citizens against traveling to Japan.

Toyota’s production in Thailand climbed 15% last month and 9% in the US, but fell 14% in China, 9.7% in Japan and 7.9% in the UK.

The European Union’s decision this month to pull back an effective ban on combustion engines appeared to offer more flexibility to legacy carmakers seeking to mass-produce battery-powered cars. While Toyota and other Japanese carmakers, which pioneered gas-electric hybrid technology, already had an edge over legacy makers that remain dependent on pure-gasoline cars, the EU’s revision could give Chinese EVs the opening they’ve been waiting for.

Meanwhile, the company has been in President Donald Trump’s crosshairs as he prepared to level steep tariffs at cars and car parts imported to the US. Earlier this month, Trump said he was paving the way for Asia’s lightweight “kei” cars to be made and sold in the US, even though they currently don’t meet federal safety standards for new vehicles.

More recently, Toyota said its going to ship three models produced in American back to Japan, a gesture aimed at accommodating Trump’s wishes.