Toyota overtakes Volkswagen to become world’s top automobile seller

By Sayujya S, Desk Reporter
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Toyota Motor, the Japanese automotive manufacturer, overtook the German carmaker Volkswagen in 2020 to become the world’s top-selling automaker, marking the first time Toyota has grabbed the position in five years.

Toyota’s group sales, which include those of its subsidiaries Daihatsu Motor and Hino Motors, were 9.53 million units for the year, the company. That is more than Volkswagen’s 9.31 million, announced earlier this month.

Difficult year

The achievement for Toyota came despite a painful year for automakers. Although demand for cars recovered marginally toward the end of 2020, industry-wide factory and showroom shutdowns were enough to drag sales down 14 percent from 2019, according to an estimate from IHS Markit, the financial services company.

It was also a difficult year in which the extent of automakers’ losses was largely determined by their level of presence in the regions most disrupted by the virus.

Volkswagen has a strong footprint in the European Union (EU), where passenger car sales fell an “unprecedented” 24 percent to fewer than 10 million units in 2020, according to the European Automobile Manufacturers Association.

Volkswagen’s Chief Executive Officer Herbert Diess initiated a strategic shift after he took over the top job in 2018 to focus on lifting profitability rather than chasing sales growth. It’s return on sales has been lagging behind Toyota for years and the market slump triggered by the COVID-19 pandemic a year ago exposed the German manufacturer’s relatively high costs.

Toyota, on the other hand, has a bigger presence in the US, where total car sales in the nation fell 15 percent in 2020. The Japanese automaker’s global sales were down 11 percent. Although the US has the most COVID-19 deaths and cases, there haven’t been the same lockdowns as in Europe.

“Naturally the number of units sold was lower than in the previous year because of the spread of coronavirus,” Toyota spokeswoman said. “But because Toyota and its partners were able to thoroughly implement measures to combat the spread of the virus, we were able to continue our corporate activities and keep yearly declines at the level they were,” she said.

Continuous competition

Prior to 2020, Volkswagen outsold Toyota every year since 2015. But the two companies’ results last year may be indicative of a longer-term trend, according to analysts.

While Volkswagen is expected to temporarily surpass Toyota again in 2021, Toyota is projected to pull ahead each year through 2025, IHS Markit said. Volkswagen’s push to produce more electrified vehicles should lead to a sales spike this year, but prolonged lockdowns and shop closures in its domestic market will continue to have an adverse impact, analysts said.

Experts predict that Toyota will continue to enjoy strong sales in its core markets of Japan and the US. In China, the world’s largest car market, it should “put up a good fight” by pushing out more electric vehicles and SUVs in line with local demand.

Although a number of factors such as the continued spread of the virus and a global chip shortage will persist in 2021, IHS Markit estimates auto sales will recover steadily to 84.4 million units from 76.8 million in 2020. Global car sales are expected to touch 94.8 million in 2025.