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Strong December Sales Cap a Good Year for Toyota

By John Rosevear – Jan 5, 2016 at 3:15PM

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The Japanese giant's car sales have been sluggish, but it has more than made up the difference with its hot-selling crossover SUVs.

Toyota's hot-selling RAV4 continued to draw lots of buyers in December. Image source: Toyota.

Toyota (TM -2.29%) said on Tuesday that its U.S. sales rose 11% in December, good enough to give the Japanese giant a 5.3% gain for the year in one of its most important markets.

That December gain fell slightly short of optimistic analyst estimates as reported by Bloomberg, and Toyota's stock was down slightly in early trading on Tuesday. But on balance, 2015 was a good year for Japan's largest automaker in the United States. 

Flat sales for Camry, but big gains for Toyota's key crossovers
Like many rivals, Toyota saw very good sales of its popular car-based crossover SUVs in 2015. Cheap gas, low interest rates, and better designs have led more and more buyers to trade in their sedans for crossovers -- and Toyota has done a good job of capitalizing on the trend.

On balance, that has been good news for most automakers: Generally speaking, crossovers are more profitable than comparable sedan models. Toyota's key crossover models have done quite well: Sales of the compact RAV4 were up almost 18% in 2015, while the bigger Highlander posted a 9% gain for the year. Both gains outpaced the overall U.S. market.

Those gains came at a price, though. Toyota's stalwart Camry sedan managed just an 0.2% increase in 2015, while the bigger Avalon sedan suffered a sales decline of almost 11%. Toyota's overall full-year results suggest that it was able to retain most of those lost sedan customers by selling them crossovers or other models, but it's still disconcerting for Toyota's best-selling model (the Camry) to post flat sales in a hot new-car market.

Toyota has had even less luck with its most fuel-efficient models. With gas prices under $2 a gallon in many parts of the U.S., hybrids have been an especially tough sell in recent months. Toyota's Prius family is the world's best-selling hybrid line, but U.S. sales dropped 11% in 2015. An all-new Prius (said to be much improved) is due at Toyota dealers shortly, but it's unclear how much that will help while gas prices stay low.

A good year for Toyota's luxury line -- but again, SUVs outpaced cars
Toyota's luxury brand, Lexus, enjoyed a strong year in the U.S. in 2015. Overall sales rose 10.7%, outpacing the overall market, with particular strength in -- once again -- crossover SUVs. The new small Lexus NX crossovers had a strong year, with almost 44,000 sold, while the bigger GX line managed a 11% year-over-year increase. 

The new-for-2015 Lexus NX crossover had a good year. Image source: Toyota.

As with the mainstream Toyota brand, Lexus's sedan models didn't fare as well. Sales of the bread-and-butter ES line fell 10.4% in 2015, while the larger LS posted a 16% decline. In total, Lexus's "truck" models posted a 26.5% sales increase for 2015, while car sales were down 1.8%. 

Still, the upshot was a profitable year for the brand. 

For Toyota shareholders: On balance, lots to like
Japanese rival Nissan (NSANY -1.04%) posted outsize sales in the U.S. in 2015, fueled in part by aggressive pricing and discounting. That aggression comes at the expense of profits, though. It's a temptation that Toyota has resisted, despite the shift in exchange rates that has made each dollar earned worth much more when translated into yen. 

That shift has resulted in record profits for Toyota in particular. But CEO Akio Toyoda seems determined to put those profits to use for Toyota's long-term benefit, making big investments in fuel cells, self-driving technology, and other advanced research and development projects. For shareholders, that's encouraging. And as long as Toyota keeps pace in the U.S. market, which it did well in 2015, those profits should continue to flow.

John Rosevear has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Toyota Motor Corporation Stock Quote
Toyota Motor Corporation
TM
$133.76 (-2.29%) $-3.13
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Nissan Motor Co., Ltd.
NSANY
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