[Dongeul Dongeul] Toyota's Soaring Performance: The Secret Behind Selling 5 Million Units in the First Half?

5.17 Million Units Sold in First Half
Highest Half-Year Performance on Record
Impact of Increased Production and Hybrid Popularity
Net Profit Forecasted at 2.58 Trillion Yen

The Japanese economy, which had been stagnant for 30 years, is recently showing signs of vitality. Following last year, there are forecasts that the earnings of Japanese listed companies will again reach record highs this year. Major Japanese media outlets such as Asahi Shimbun predict that Japanese listed companies will achieve a net profit of a staggering 43.7 trillion yen (approximately 394.4143 trillion KRW) in the 2023 fiscal year (April 2023 to March 2024). This represents a 5% increase compared to the previous year.

Among them, Toyota Motor's growth stands out particularly. Toyota sold more than 5 million vehicles in the first half of this year for the first time in its history. Toyota's total vehicle sales last year were 9.6 million units, meaning it sold more than half of the previous year's sales volume in just half a year. What is the secret behind Toyota's ability to achieve such massive sales volume?

Koji Sato, the new president of Toyota Motor Corporation (center) [Image source=AP Yonhap News]

Toyota sells 5 million vehicles in first half... highest half-year performance ever

On the 30th, Toyota announced that it sold a total of 5,172,387 vehicles in the first half of the 2023 fiscal year (April to September). This is a 9% increase compared to the same period last year. It is the highest half-year performance ever, significantly surpassing the previous record of 4.95 million units in the first half of 2019.

Prius 5th Generation [Image Source=Toyota Official Website]

First, overseas sales reached 4,382,219 units, a 6% increase compared to the same period last year. By region, sales in North America and Europe increased by 9% and 7%, respectively, leading the global vehicle sales growth.

In Asia, sales in Thailand and Indonesia declined compared to last year, but sales in India surged by 24%. Although China was affected by the economic downturn and the rise of domestic electric vehicle manufacturers such as BYD, sales in the hybrid segment increased, maintaining sales volume at a level similar to the previous year. Domestic sales in Japan recorded 791,068 units, a 34% increase compared to the previous year.

Increased production at US plants and rising demand... hybrid vehicle popularity also a factor

The background to Toyota's strong leap forward lies in increased production and the growth of the hybrid market.

First, the vehicle semiconductor supply issue triggered by COVID-19 was resolved, allowing production to exceed 5 million units. The number of vehicles produced between April and September totaled 5,088,248 units, a 12.8% increase compared to the previous year. This is the first time Toyota's sales and production volumes have both exceeded 5 million units in the same period.

An electric vehicle (EV) battery factory of Toyota Motor located in North Carolina, USA.
[Image source=AP Yonhap News]

However, Toyota's achievements cannot be simply attributed to the rebound effect from resolving semiconductor supply issues. Toyota's persistent efforts to actively expand production facilities in the North American market also contributed to increasing production volume. Currently, Toyota has 12 complete vehicle parts factories across four production bases in North America. Last year, Toyota invested a total of 380 million USD in these four bases to increase hybrid vehicle production and to start full-scale electric vehicle production. The Nihon Keizai Shimbun analyzed that Toyota's facility expansion in North America drove the overall production increase.

At the same time, the surge in new car demand in the US allowed the increased volume to be sold quickly. Consumers who were unable to purchase cars during the parts supply shortage caused by COVID-19 flocked to the market, causing new car sales in the US to surge in the third quarter of this year. New car sales in the US during this quarter reached 3.9 million units, a 17% increase compared to the same period last year.

The popularity of hybrid vehicles is also an indispensable factor when discussing Toyota's improved performance. In the US and European markets, demand for electric vehicles has recently slowed, while demand for hybrid vehicles has steadily increased. More people prefer hybrids over electric vehicles due to long charging times and a lack of charging stations. The fact that electric vehicles are on average more than 10,000 USD more expensive than internal combustion engine vehicles also contributes to the popularity of hybrids. Global market research firm GlobalData forecasts that global demand for hybrid vehicles will increase by 85% from 3.7 million units in the previous year to 8.06 million units in 2025.

Toyota, which holds 60% of the hybrid market, is benefiting from this trend. This year, Toyota is expected to sell about 600,000 hybrid vehicles in the US market alone, a 7.5% increase compared to last year's sales volume. Accordingly, Toyota has revised its previous strategy of going all-in on electric vehicles and is pursuing a 'two-handed' strategy by doubling hybrid vehicle production. The strategy is to use hybrids as a bridge to electric vehicle transition and secure market share.

Profit amplified by weak yen effect... net profit expected to reach 2.58 trillion yen

Toyota's good fortune does not seem to end here. This year, as the Japanese yen fell to an all-time low, Toyota is expected to gain an additional operating profit of 890 billion yen from the weak yen effect alone. Toyota forecasts that its net profit this year will reach 2.58 trillion yen, a 5.2% increase compared to the previous year.

[Image source=Reuters Yonhap News]

Although Toyota has lagged behind other global companies in the electric vehicle transition, it is currently painting a rosy outlook comparable to any other company. However, Toyota appears to be maintaining vigilance. The time when the automotive market shifts to being centered on electric vehicles is approaching, but Toyota is struggling to secure market share in this segment. Toyota has set a goal to invest 5 trillion yen in electric vehicle development and achieve sales of 3.5 million units by 2030. For Toyota to continue painting a rosy future, securing market share in the electric vehicle market will be crucial.

This content was produced with the assistance of AI translation services.