Toyota Was Dubbed a Doddering Octogenarian When It Refused To Budge Toward EVs and Now Its Dealers Just Captured 29 Percent of the Industry’s Total New Car Gross Margin
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Sometimes, going against the herd pays off massively. Case in point: Toyota is thriving right now with its hybrids-first strategy, while its competitors, including Tesla, the erstwhile king of the auto space, continue to contend with a challenging demand environment and shrinking margins.
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Cox Automotive recently published interesting insights into the auto market dynamics in the US, noting:
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In other words, if the entire dealership market in the US earned a total of $1 on all new cars sold in February, the dealers associated with Toyota and Lexus earned a whopping 29 cents of that pie despite accounting for only a minuscule fraction of the total American dealerships!
The report cites a number of reasons that have allowed Toyota to mount this coup d'état of sorts:
- Toyota has built a relationship with its dealers that is based on trust, going so far as to collect input from its dealerships on the monthly production levels, which helps to maximize dealers' margins by aligning supply with the available demand.
- Toyota's hybrids-first strategy is paying off massively, with the company coming second only to Tesla in terms of the total emissions credits sold in 2023.
- Toyota topped the J.D. Power Automotive Brand Loyalty study for the second time in a row in 2023.
- Toyota and Lexus dealerships are currently two of the industry's most valuable franchises.
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In the first nine months of its fiscal year 2024, Toyota sold 2.8 million electrified vehicles, with hybrids accounting for the vast majority of this
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