The Japanese company’s strength in China has helped offset a poor performance in the United States, where its sales are declining. And it’s predicting further growth in China this year.
Toyota has bucked the trend thanks to a combination of factors, analysts say, including the company’s intensified focus on the Chinese market, new tariffs that have hurt some of its rivals, and its stable of hybrid vehicles.
Trade war winner
“Consumers need some alternative, of which Toyota is one of the more attractive options,” said Mio Kato, founder of Tokyo-based equity research firm Lightstream Research.
Toyota did better last year than other Japanese carmakers. Nissan’s sales in China rose just 3%, while Honda’s slipped 1%, according to data provider Marklines.
That’s partly because Toyota is playing catchup in the world’s number two economy, Kato said. It sells about half as many cars in China as GM. The Japanese company has historically prioritized the United States, its biggest international market, according to analysts.
The Chinese government’s big push to get more electric vehicles on its roads as it battles air pollution and carbon emissions has helped Toyota, according to analysts. China is the world’s biggest market for electric vehicles, accounting for about half of global sales.
Toyota has been pushing sales of its hybrid-engine vehicles, which are proving popular with Chinese drivers who can’t yet afford to switch to a fully electric car.
The Chinese government has also realized that in order to meet its vehicle emissions targets, it can’t rely on electric vehicles that run purely on batteries, analysts say. Hybrids are generally cheaper to buy than battery-only cars and don’t face the same worries from consumers about their driving range.
“Government backing for hybrid vehicles in China is likely to make things much easier for Toyota and give the company a significant leg up on the competition,” Kato said.