Updated: Aug 22, 2018
Green tinged Toyota, unable to take full advantage of diesel downfall
During a seemingly unstoppable West European market share whirlwind seeing its market share double in a fast-paced decade from 2.5 per cent in 1995 to 5.1 per cent in 2005 rising to a record 5.5 per cent in pre-crisis 2007, that was as good as it got for Toyota
In Japan, before Lexus and Daihatsu are added to the equation, Toyota retains on average just over 30 per cent share of its domestic passenger car market. In the US - its biggest vehicle market – on its own Toyota’s vehicle sales share now stands at a massive 12.3 per cent, beating GM’s Chevrolet brand in the process. Yet, in Western Europe, by direct comparison Toyota remains a laggard. After peaking at 5.5 in 2007 the Toyota brand hit the slippery slope and since then has lost a fair chunk of its high earlier West European market share.
After 6-months this year its West European sales rose by 4.4 per cent - more than twice the pace of the market - yet that advance saw its market share rise by just 0.1 percentage points to 4.2 per cent. The 335,700 units sold in the region during this year’s first half put it behind Fiat with 5.1 per cent market share and ahead of fading Nissan with 3.3 per cent. Nissan’s half-year sales fell 10.9 per cent according to Acea. Since 2011 Toyota Group (including Lexus) can no longer call itself the largest Asian importer in the region seeing its annual sales surpassed by Hyundai/Kia. As things stand after 6-months this year Hyundai/Kia’s West European market share stands at 6.1 per cent while Toyota Group’s hovered around the 4.5 per cent mark.
One overwhelming surprise in Western Europe has been Toyota’s inability to capitalise on the region’s diesel scandal that broke in late 2015. Since then Western Europe’s passenger car market continued its upward trajectory while the diesel sales mix sank like a stone loosing 16.9 market share percentage points since 2015. In what first appeared to be a huge advantage to the Toyota brand - already tinged with a green alternative energy image thanks to years of work on its hybrid strategy - has benefited the brand less than expected. Since 2015 Toyota has gained less than 0.5 percentage points of West European market share. That’s in spite of attractive incentives in major markets like Germany for trading in older diesel vehicles in particular.
No diesel passenger car from 2019 in Europe
Toyota, ahead of this year’s Geneva Motorshow in March, announced its intention to stop selling diesel passenger cars in Europe by close of this year. For some observers this announcement could have been more beneficial to Toyota had it come a year or so earlier. Today Hyundai-Kia also joined the petrol-electric hybrid market in Europe and Audi for one started selling its Mild Hybrid Electric Vehicles (MHEV).
More than half the Toyota cars sold last year in Western Europe were HEVs, according to AID data. Moreover, diesels made up just 6.3 per cent of its same year sales. While other manufacturers were talking about what will happen to their diesel share in 2025, Toyota more or less missed the opportunity to shout from the rooftops that today its diesel share was already below 10 per cent. At the same time it posted more than half a million annual car sales in the region last year.
Toyota’s share of West Europe’s HEV market in 2017
Last year Toyota sold nearly 320,000 hybrids in Western Europe. This was 74 per cent share of all the non-plug-in hybrids registered (80 per cent including Lexus) in the region last year according to AID and Acea sales data.
This was down from a share of 77 per cent in the previous year mainly due to the increase in models from other manufactures coming to the market such as from Hyundai and a number of models fitted with mild hybrids (MHEV). Thanks to these less sophisticated MHEV additions hybrid sales in the region made up by full hybrid electric vehicles (HEV) and MHEVs accounted for 428,735 sales seeing sales rise by 49.6 per cent over 2016 levels. After 3-months this year the market for hybrids was already up by a further 22.6 per cent accounting for 3.5 per cent of total passenger car sales in the region according to Acea data.
Missing out on 25 per cent of Norway’s market yet still 2nd largest manufacturer
Toyota’s largest European market after 6-months this year, in terms of sales volumes, was the UK with just under 60,000 sales according to SMMT data yet one of the largest markets when it comes to market share penetration was perhaps surprisingly Norway despite Toyota not having a single electric car on offer – not including its low scale hydrogen Mirai vehicle (130 units sold in Europe last year). Toyota remained Norway’s second largest manufacturer with a market share of 10.3 per cent, in what remains Europe’s largest electric car market where on average one-in-four sales are pure electric plug-ins. Volkswagen which had a one third BEV mix of its total sales last year remained Norway’s largest manufacturer. Toyota’s only plug-in offering, its PHEV version of its Prius, registered a disappointing 174 units so far this year according to OFV data or just 2 per cent of its total 9,022 vehicles registered up to July.
Toyota likely to be one of first manufactures to reach 2020/21 EU CO2 target
EEA (European Environment Agency) data published by ICCT (International Council on Clean Transportation) shows Toyota Group’s EU Europe fleet average CO2 emissions reached just 103g/km last year (2017) making it likely to become one of the first manufactures to reach its 2020/21 target expected to be 94g/km.
Toyota’s long-term hybrid (HEV) strategy therefore appears to have paid off handsomely. At the same time it’s still making money in the region. Toyota Motor Europe, this fiscal first quarter (April to June 2018), posted a 2.9 per cent operating margin.
Now is the time for Toyota to forget about its modesty and shout about its genuinely green and profitable achievements. That’s more than can be said for some of the strategies from other manufacturers in the region that bet their European future on diesels and lost. In consequence, many are now left with little option but to turn to unprofitable battery electric vehicles in a last ditch effort to reduce their fleet average CO2 emissions before the 2021 deadline.