Toyota Motor Corp. said declining sales contributed to a drop in operating income for the first time in two years, according to the automaker’s Q2 earnings report released Nov. 6.
The automaker’s Q2 operating income fell by nearly 283 billion yen ($1.8 billion) year-over-year, resulting in a profit of about 1.16 trillion yen. Its YoY margins also declined from 12.6% to 10.1% in the quarter.
“Toyota and Lexus vehicle sales were 5,029,000 units, which was 97.2% of sales for the same period last year,” said Masahiro Yamamoto, chief officer of Toyota’s accounting division, during the company’s earnings call. “Due to the impact of halting production to address certification issues, et cetera, sales volume decreased.”
Toyota sold approximately 1,348,000 vehicles in North America in the first half of the fiscal year ending March 31, 2025, a decrease of 2.7% or 37,000 units, the automaker reported.
Toyota’s Q2 sales in North America, which is its largest global market, fell 8.5% year over year to approximately 643,000 vehicles, down from 703,000 vehicles a year ago. Consolidated vehicle sales for all global markets reached 4,556,000 vehicles, representing a 4% decline from the same period a year ago.
Toyota cited several factors for declining North America vehicle sales, including uncertain economic conditions, market demand and a more competitive environment.
Despite the sales drop, Toyota’s total Q2 sales revenue increased by 9.7% to 11.44 trillion yen, which can be partially attributed to an overall rise in vehicle prices. The average new vehicle transaction price was $48,397 in the U.S. in September, according to Cox Automotive.
Toyota also reported sales declines in its home market of Japan, due in part to the fallout from a safety scandal in the country involving two dozen Toyota models . The company sold approximately 939,000 vehicles in Japan in Q2, a decrease of 133,000 units.
“In the first half of this fiscal year, domestic production volume was 1.53 million units, which was lower than the previous fiscal year's actual results and the initial forecast, said Toyota CFO Yoichi Miyazaki in the earnings call. “This was due to the need to address the certification issues and taking time to re-examine our manufacturing environment and culture.”
Though Toyota reported an overall sales decline, the automaker saw its electrified vehicles sales spike in the first half of FY 2025, which includes hybrids, fully electric models and fuel cell EVs. Sales of these models jumped by 20.7% YoY in Q2, with electrified models accounting for 44.4% of the automaker’s consolidated vehicle sales for the first half of the year, up from 35.3% a year ago.
Toyota forecasts that combined sales of hybrids, fully electric models and fuel cell EVs, will reach 4.64 million vehicles in the fiscal year ending March 31, 2025, representing around 46.0% of Toyota’s global sales mix. The automaker expects that its full-year sales will reach 9.4 million vehicles.
