The world’s most successful automobile manufacturer Toyota Motor It reported the first decline in quarterly profit in two years due to slowing sales and production volumes.

Until earlier this year, the Japanese automaker was generating record profits with a strong focus on hybrid models, helping it capitalize on growing consumer interest in more affordable cars over expensive battery electric vehicles amid rising inflation.

However, fierce competition from Chinese brands in the world’s largest auto market and the recently resolved discontinuation of two US models have begun to slow sales in recent months.

Operating profit toyota It amounted to $7.55 billion in the three months to the end of September; This is 20% less than the previous year. This is broadly in line with the average earnings estimates of nine analysts surveyed by LSEG.

Operating profit in North America, where the largest market is located toyota — The United States suffered from lower sales and rising labor costs. Operating profit in China fell in the first half of the fiscal year due to increased marketing costs as the company tried to overcome tough price competition from Chinese brands.

In the July-September period, hybrids accounted for more than two-fifths of total global sales of Toyota and Lexus cars, compared to one-third in the same period last year. Shares are interesting toyota It increased by 1% after the results were announced.