Toyota Facing First Sales Dip Since 1995

Anyone who thinks the impact of the current automotive downturn is limited to the Big Three domestic automakers is in for a rude shock. At a meeting with shareholders, a senior Toyota Motor Co. official revealed that sales in the crucial American market will likely take their first dip since 1995.

Until now, it has become a matter of conventional wisdom that Toyota will increase its sales and market share every year, almost like clockwork. But the situation is unexpectedly dire, with U.S. demand likely dipping to the mid-14 million range, as much as 3 million units below the peak set early in the decade.

"We are struggling in the U.S.," Executive Vice President Tokuichi Uranshi was quoted telling 3,200 worried stockholders. "Higher fuel prices and the subprime loan crisis have cut demand."

Analysts say Toyota's turn of fortune reflects the downside of an otherwise winning strategy. When the automaker last posted a sales loss, of just 0.4 percent, in 1995, it was still a relative niche player, just beginning to get serious about the then-booming American light truck market. Adding minivans, pickups, and SUV models to its lineup has helped drive the automaker's growth - pushing it, in fact, into the No. 2 spot, past faltering Ford Motor Co.

But it has also left Toyota more vulnerable to market ups and downs. With May sales off 4.3 percent, much of that on the truck side, the Japanese maker has announced it will cut back production at two of its U.S. truck plants and has delayed opening a new crossover/SUV assembly line.