published Oct 30, 2017, 7:18:23 PM, by Jamie Butters and John Lippert
(Bloomberg) —
Look out, Detroit: Toyota Motor Corp. is on a roll in the U.S.

Toyota took 15 percent market share last quarter for the first time since 2009. Its RAV4 car-based sport utility vehicle is the industry’s most popular vehicle this year aside from the top pickups, outselling even its own Camry midsize sedan. It beat Ford Motor Co. each month of the third quarter, and analysts project it’s likely got a fourth month in the bag.

And now Asia’s largest automaker is approaching an even bigger prize in the U.S.: retail sales leadership.

Retail sales — or those sold to individuals — are generally seen as a better indication of demand than a carmaker’s total deliveries, which include discounted fleet sales to governments and businesses, including rental-car companies. Though Toyota is more than 360,000 vehicles behind industry leader General Motors Co. in total sales this year through September, it’s only about 70,000 behind when it comes to retail, halving the gap from this time last year, according to LMC Automotive.

“If you sense a little spring in my step, our retail volume — which is what we focus on — is actually up 3 percent,” Bob Carter, Toyota’s top sales executive for North America, said in an interview. Even though Toyota’s U.S. fleet sales are down 11 percent through September, he now sees total sales topping his initial forecast of 2.44 million. “With two months and one week to go, I’m very confident in that, particularly with our current momentum,” he said.

Industry Sales

Bloomberg’s survey of analyst estimates shows Toyota will report Wednesday one of the biggest monthly sales gains in October, with deliveries likely rising 4 percent. Fiat Chrysler Automobiles NV probably led declines with a 12 percent drop from a year earlier, when Ram pickups and vans surged and the company was still selling its fleet-heavy Jeep Patriot.

The only gain expected to be bigger than Toyota’s is for combined sales of VW and Audi, which are seen rising 10 percent as Volkswagen AG continues to try to put its diesel emissions-cheating scandal in the past.

Industrywide, October sales probably ran at about a 17.6 million pace, which would be 2017’s second-best month behind only September’s blowout 18.6 million but still down from last year’s rate. Continued demand to replace vehicles damaged by hurricanes — particularly in the Houston market, but also across Florida — likely gave sales a boost.

The retail race that Toyota is giving GM and Ford can be traced to its popular RAV4, which Carter rightly predicted in late 2015 would outsell Camry within five years. But Toyota’s hot streak goes beyond the crossover. On the luxury front, Lexus has been jostling for second place in the U.S., and Toyota just rolled out a redesigned version of the Camry, which is off to a strong start.

New System

Carter said he’s “really excited” about the new sedan, built on the Toyota New Global Architecture platform that underpins almost every new model from the Prius hybrids to the Toyota Highlander. Toyota will soon add its Tundra full-size pickup to the TNGA platform, Shinichi Yasui, executive vice president for research and development at Toyota’s North American unit, said last week in an interview.

The shared platform promises the ability to scale designs globally, reducing cost and complexity across the company’s more than 50 factories. But it also raises the possibility that a single common defect — including from purchased parts or components such as an air bag or steel — can affect millions of vehicles.

“It’s a risk, for sure,” said Michael Held, a director in the automotive and industrial practice of AlixPartners. “With this global architecture, I can only imagine that they did their homework when it comes to product validation and manufacturing-process validation.”

Short-Term Shift

Even with Toyota likely logging a fourth straight month of higher total sales than Ford — something Toyota last achieved in 2009 — Carter said he doesn’t see that as a permanent shift.

“Is it sustainable to outsell Ford? Honestly, I don’t see it happening, because of the importance of pickup trucks in the commercial environment,” he said. Those sales may be down for now, but they’ll come back.

“That’s just not a goal for us,” he said. Retail is “the area that we feel is very important for the company, for our retailers and our consumers.”