Section 1. Heightened Presence in the North American Market
Item 1. Increasing Presence in the North American Market
Market slump due to global financial crisis
The emergence of the sub-prime loan crisis in 2006 sent the U.S. economy into a slowdown. The following year in September 2008, the major investment bank Lehman Brothers filed for bankruptcy, throwing the world economy into turmoil.
Meanwhile, soaring oil prices coupled with the decline in the U.S. economy accelerated the consumer shift away from truck-based models to compact, fuel-efficient cars. This caused a sharp slump in truck-related sales, which were the backbone of America's "Big Three" automakers, and in 2008 the U.S. automotive market shrank to 13.24 million vehicles, as year-on-year decrease of 18 percent.
In an attempt to spark life into the auto industry, the U.S. government announced "cash for clunkers" scrap incentives in July 2009, offering subsidies for consumers who traded in end-of-life vehicles for new cars, leading to a recovery, albeit a fragile one, in the market. By 2010, the U.S. economy was on track toward a slow recovery. The automotive market, which had fallen to 10.43 million vehicles in 2009, had shaken off the nightmare scenario of dipping below the 10 million mark. A recovery in trucks had begun to show, and in 2010 the market was back up to 11.59 million vehicles.
Sales of Toyota vehicles grew steadily, particularly the company's core models. This was backed by the scrap incentives and sales promotions such as special pricing programs offered with the support of Toyota Financial Services. By brand, in 2009 the Toyota brand had the highest sales for the third consecutive year, the Lexus brand was the top luxury brand for the 10th year in a row, the Corolla and Camry models dominated the passenger car segment, filling the top two positions, and the company had the highest non-fleet (sales to individuals) sales for the first time in its history.
Although the Canadian automotive market also saw an increase in demand for fuel-efficient compact cars as oil prices rose, overall demand fell after the onset of the financial crisis that had started in the United States. However, the automotive market recovered to 1.5 million vehicles in 2009 thanks to stimulus policies enacted by the Canadian government.