Toyota Tundra trucks get floor mats and other accessories at the Friedkin Group Gulf States Toyota processing facility before being shipped to dealerships.

Toyota Motor Corp. sales fell 21 percent in July as would-be buyers faced high prices at the gas pump, rising interest rates and tight supply that pushed new car prices to record highs.

There was a local bright spot, though. The San Antonio-built Tundra full-size pickup had its second-best sales month since December 2020, with dealers moving 10,694 Tundras last month.

The Japanese automaker began producing the redesigned Tundra late last year after a $400 million expansion at its South Side plant.

Toyota is also planning to start building the redesigned full-size Sequoia SUV in San Antonio sometime this summer, but it’s not clear when. Just a dozen Sequoias were sold last month.

Toyota employs about 3,200 people at its plant on the South Side.

On ExpressNews.com: Production of new Sequoia, Tundra comes to South Side, marking a new era for Toyota in San Antonio

For the 12 months through July, Toyota’s sales were down 19 percent from the same period a year earlier, and it’s seen declines every month this year.

The biggest hurdle for Toyota and other automakers is the shortage of parts that’s persisted since the pandemic threw off supply chains. That’s cut production — and sales.

Just 1.12 million new vehicles were for sale in the U.S. at the end of June, virtually unchanged since the beginning of May. The lack of cars available for purchase has pushed the average sale price for new vehicles to just past $48,000 in June — an increase of 13 percent from a year earlier, according to Cox Automotive.

But as the Federal Reserve lifts interest rates and makes loans more expensive, there’s a chance auto prices could moderate in coming months as fewer would-be buyers are able to afford higher monthly payments.

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Through mid-July, the average auto loan rate increased by 1.5 percent, according to Cox. That translated to a 5 percent increase in monthly auto payments this year. As a result, the average monthly payment for a car hit $730.

That could bring the market to a tipping point. As the Fed continues increasing rates to combat inflation, monthly payments will rise further and “demand could diminish just as production and product availability improves,” Cox analysts said. “In that scenario, we could see the return of some discounting and incentives.”

“Rising interest rates and low consumer sentiment are keeping many potential buyers out of the market,” Cox Senior Economist Charlie Chesbrough said. “Tight supply, however, continues to be the biggest obstacle over the near term, and there is little evidence of supply returning to normal.”

Diego Mendoza-Moyers is a business reporter covering energy, manufacturing and labor. A native of El Paso, he has previously written for the Albany Times Union, Las Vegas Review-Journal and Arizona Republic. He graduated from Arizona State University with a B.A. in journalism. Call Diego at 210-250-3165 or email diego.mendoza-moyers@express-news.net