Volkswagen and Toyota logos Sean Gallup, Getty Images; Getty Images

VW Edges Toyota in Global Sales as Prius Stumbles

Toyota VP: “We’re trying to sell cars in a truck industry. With gas prices on hybrid vehicles, it’s making it a challenge for us to sell the Prius.”

Toyota Motor Corp. lagged behind Volkswagen AG by global deliveries in the first half of the year, as demand for the newly redesigned Prius hybrid slumped in a U.S. market dominated by trucks and sport utility vehicles.

Worldwide deliveries fell 0.6% to 4.99 million vehicles in the six months through June, Toyota said in a statement. Volkswagen’s sales climbed 1.5% to 5.12 million units in the same period.

Despite introducing a new-look sedan model featuring improved mileage and a higher-tech interior, U.S. deliveries of Toyota’s Prius hybrid line plunged 25% in the first half of the year. That held Toyota back from regaining its global sales lead after suffering a series of production disruptions in the first quarter.

Volkswagen is threatening Toyota’s four-year reign as the world’s largest automaker even as it deals with the rising price tag for having installed cheating software in about 11 million vehicles worldwide. The company has set aside more than 18 billion euros ($19.99 billion) to cover costs arising from the scandal.

The Prius line fell behind Toyota’s Tacoma pickup by U.S. sales during the first half, as low fuel prices boosted demand for trucks and SUVs.

“We’re trying to sell cars in a truck industry,” Paul Holdridge, vice president of Toyota division sales in the U.S., said on a conference call earlier this month to discuss the company’s 2.7% drop in first-half deliveries. “With gas prices on hybrid vehicles, it’s making it a challenge for us to sell the Prius.”

Toyota’s domestic production was undercut early this year by a one-week shutdown at all Japan assembly plants in February, following an explosion and fire at a steel-making affiliate. The company said it also lost output of another 80,000 vehicles due to earthquakes in Kumamoto prefecture, Japan’s most devastating since March 2011.

By Craig Trudell and Yuki Hagiwara, with assistance from Christoph Rauwald

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