Strong demand from US and Europe helps Toyota hit annual production record

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Global production for Toyota, the world’s biggest carmaker by sales, has reached an all-time annual high with one month left of 2023, in a vindication of a strategy often criticised for not putting enough emphasis on selling pure electric vehicles.

Strong sales of hybrids have compensated in 2023 for its slow rollout of electric vehicles. For the January to November period, worldwide production rose 11 per cent from a year earlier to 9.23mn vehicles, amid robust demand in Toyota’s core markets, including the US and Europe. The previous full-year high was 9.05mn units in 2019.

Global sales for the broader Japanese group, which includes van and truck maker Hino Motors and compact brand Daihatsu Motor, also increased 7 per cent to 10.2mn vehicles, putting it on track to become the top-selling global carmaker for the fourth straight year. 

Earlier this month, Germany’s Volkswagen said it sold 8.3mn vehicles globally during the first 11 months of the year, up 12 per cent.

One market where Toyota has continued to struggle is China, where sales during the period dropped 2 per cent from a year earlier to 1.7mn vehicles. However, in November, sales increased 17 per cent year-on-year to 164,524 units, as Japanese carmakers wrestled to keep pace with the rapid shift away from the internal combustion engine and the rise of Chinese EV groups.

Toyota has laid out plans to sell 3.5mn battery-powered vehicles every year from 2030 as it competes against Elon Musk’s Tesla. But this year, it has only sold 95,220 pure EVs, while it has sold 3.2mn petrol-electric hybrids and plug-in hybrids. 

The carmaker has said it remains committed to what it calls “a multi-pathway approach” that relies on a broad variety of cars sold across more than 170 countries, including many where EVs remain unaffordable for years to come. 

After spending the past year on efforts to convince investors that it was serious about ramping up its EV strategy, Toyota is also expected to outline why it thinks hybrids are a viable alternative during the transition period as the world shifts to battery-powered cars.

Shares in Toyota climbed nearly 2 per cent on Wednesday on the record-breaking production numbers. They had suffered falls last week in the wake of news of a widening scandal at Daihatsu, which has been forced to halt worldwide shipments due to widespread irregularities in crash safety testing dating back more than three decades. 

Daihatsu had released results from a third-party investigation panel, which found 174 irregularities in collision safety testing. The latest findings have affected a total of 64 models, including 22 models sold by Toyota. 

It remains unclear what kind of reputational damage and direct impact Daihatsu’s scandal will have on Toyota’s sales. Up to the end of October this year, the subsidiary had manufactured 1.1mn vehicles and accounted for 7 per cent of Toyota’s global revenues.