As Toyota adds one Crown this year, it's on pace to lose another

Nearly nine months ago, executives at Toyota Motor North America were quietly marking the fact that Toyota and Lexus had collectively bested General Motors, ending a remarkable 90-year run by the Detroit automaker as the undisputed sales champ in the U.S.

Publicly, they were exceedingly humble about it — even if Toyota Motor Corp. CEO Akio Toyoda may have done "a little happy dance" over the achievement.

But it seems Crowns come and go for Toyota — the full-size sedan is coming back to the U.S. this fall for the first time since 1972 — and the Japanese automaker appears to be headed for its worst sales performance in the U.S. since the last time its supply chain was rocked by major disruptions in 2011.

Collectively and through the first three quarters of the year, Toyota and Lexus sales slipped 15.4 percent in the U.S. to 1,571,714. If the pace of decline holds steady in the fourth quarter, it would mean the Japanese automaker -- which sold 2,332,262 vehicles last year -- would finish the year at around 1,973,000 sales — the first time it would be under 2 million U.S. sales since suffering the effects of the devastating earthquake and tsunami in its home nation in 2011.

By comparison, GM's sales dropped 7.2 percent through the first nine months to 1,639,591, including a 25 percent gain in the third quarter over last year.

"We're still selling every car we can build," David Christ, head of the Toyota division, told Automotive News on Monday in an exclusive interview. "Every month, it seems that a new issue pops up that we weren't expecting."

One example: In August, Toyota's U.S. sales were down 9.8 percent because it had trouble finding sufficient rail cars to move its production to dealers.

"We made that up in September," when sales jumped 17 percent, Toyota's first year-over-year increase since June 2021, Christ explained. "So we kind of just pushed [sales] from one month to the next, and we think kind of that same vibe is going to happen for the rest of the year, meaning we're going to be richer in some months and hungry in other months, and we're going to work through it."

What happens in the fourth quarter may come down to luck as much as perseverance.

Toyota hasn't released a formal full-year projection, but Christ said that internally, the automaker is expecting to be "flat or down a little bit" from the 2,332,262 vehicles it sold in the U.S. in 2021. As it is across most of the rest of the industry, the problem remains with supply, not demand.

"It's a very tenuous state in the supply chain still," Christ said, adding that his brand started October with just 16,157 vehicles in dealer stocks, "including about 3,000 in Florida markets where [Hurricane Ian] put them out of business for a few days." The Toyota brand had another 103,080 vehicles in its logistics pipeline waiting to be delivered to dealer lots, and Christ said the brand had "almost a month" of pre-sold customer orders still waiting to be either produced or delivered.

On the smaller but more profit-rich Lexus side of the Japanese automaker's house, the extreme inventory constraints from earlier this year — at one point, Lexus dealers in the U.S. had just about 1.5 days of inventory on their lots — have eased slightly, though unsold stocks remain "slim pickings," said new Lexus head Dejuan Ross.

"I think hopefully we should get a little bit of tailwind for the fourth quarter from a wholesale standpoint, if all the stars align and we don't get any new surprises," Ross explained, adding that the brand's 6,765 unsold vehicles on dealer lots are "helping dealers at least have a few units that they didn't have in the first half of the year." Lexus had another 14,808 vehicles awaiting delivery to dealers because of its extended delivery pipeline back to Japan.

Ross said that Lexus dealers continue to see strong consumer demand despite dramatically increasing interest rates that have hampered leasing penetration overall, potentially impacting the brand's ability to keep returning customers in the fold. The brand is preparing to launch a redesigned version of its top-selling nameplate, the 2023 Lexus RX crossover, in the fourth quarter, and is focusing on "tools to maybe retain the current guests that are in that car ... and leasing will be a component of that," Ross said.

Both Christ and Ross said repeating Toyota's U.S. sales crown in 2022 is not a priority, a focus or even a goal.

"We're still going to do pretty big volume, and our share is still strong. So like last year, we don't get wrapped up in [whether we're] No. 1 or not," in sales, Christ said. "We get wrapped up in building every car we can every day, and taking care of customers and taking care of dealers. Obviously supply chains hit different manufacturers at different times, and you know, we are pretty focused on building every car we can and getting back to full volume."