Toyota Motor (NYSE:TM) said that its U.S. sales fell 16.5% in September. Nearly all of its models suffered year-over-year declines, as buyers seeking larger vehicles turned away from Toyota's mainstay sedans and fuel-efficient crossovers. 

It was Toyota's largest monthly U.S. sales decline since September 2011, when the company was still working to rebuild inventories after the March 2011 earthquake and tsunami in Japan.

For the third quarter, Toyota's U.S. sales fell 9.9% from the third quarter of 2018, but the company still sold enough vehicles to outpace rival Ford Motor (NYSE:F) for second place in the United States. 

Here's how Toyota's quarterly result stacks up against its five largest-selling rivals.

Automaker Q3 2019 U.S. Sales Change vs. Q3 2018
General Motors 738,638 6.3%
Toyota Motor 627,194 (9.9%)
Ford Motor  580,251 (4.9%)
Fiat Chrysler Automobiles 565,034 0.1%
Honda Motor 429,214 2.4%
Nissan Motor 327,354 (4.8%)

Data sources: The automakers.

Through the first nine months of the year, Toyota's U.S. sales were down 2.5% from the same period in 2018.

The market is moving in ways that don't favor Toyota

First, a note about that quirk of the calendar. Toyota noted that September of 2019 had just 23 "selling days," two fewer than September of 2018, making for a somewhat unfavorable year-over-year comparison. ("Selling days" exclude Sundays and holidays, when many auto dealerships have traditionally been closed.)

But even using the company's "DSR" (daily selling-rate-adjusted) figures, Toyota didn't have a lot to celebrate in September, as consumers continued to move away from sedans while rivals continued to flood the market with new crossovers and SUVs:

  • Toyota-brand car sales, traditionally a key driver of volume and profit for the company, were down 12.3% in September, 4.7% on a DSR basis. Even on a DSR basis, only the compact Corolla posted a sales gain; sales of all other Toyota-brand cars, including the top-selling Camry, declined from a year ago.
  • It was a similar story with Lexus-brand car models. All were down by double-digit percentages from September of 2018, even on a DSR basis, with one exception: Sales of the expensive high-performance RC model rose to 334 in September, from 258 a year ago. 
  • Toyota's SUVs and pickups didn't do much better. Again, even on a DSR basis, sales of all Toyota-brand trucks other than the compact RAV4 crossover (down 6.8%, but up 1.3% on a DSR basis) declined from a year ago. The group, which includes Toyota's SUVs, crossovers, and its Tacoma and Tundra pickups, was down 17.1% from a year ago, 9.9% on a DSR basis.
  • Lexus-brand SUVs didn't do any better. Sales of all were down by double-digit percentages, even on a DSR basis.
A blue 2020 Toyota Corolla Hybrid, a compact four-door hatchback.

Toyota is hoping that new hybrids, including the first-ever Corolla hybrid, can help it find growth as rivals emphasize trucks and SUVs. Image source: Toyota.

There was one bright spot for Toyota

There was one bit of good news in Toyota's September U.S. sales numbers, and it's one that gives us some insight as to how Toyota is approaching the market right now. Sales of Toyota-brand hybrids rose 27.4% in September from a year ago, 38.5% on a DSR basis. 

The Toyota brand's U.S. sales chief, Jack Hollis, said that Toyota is "doubling down" on hybrids for the U.S. market, adding hybrid versions of more of its mainstay models as other automakers continue to invest in trucks and SUVs. "We plan to further advance our spot as the hybrid leader for years to come," he said.

I think we'll see Toyota continue to emphasize taking market share from segments where rivals are retreating. Specifically, as companies like Ford and GM drop most of their sedan models, Toyota will continue to invest aggressively in its Corolla, Camry, and other sedans, betting that it can still find growth in a shrinking overall market by taking a larger share over time.

That will probably be enough to keep Toyota on course, but investors might question whether it will be enough to drive profit growth. We'll learn more when Toyota reports its quarterly earnings next month.