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For years, Toyota Motor Corp. focused on pushing its hybrid models in Europe, avoiding a diesel-for-diesel competition with market leaders including Volkswagen AG. The Japanese carmaker’s strategy is finally paying off. In the first full year since Volkswagen’s emissions scandal threw the German giant into disarray, Toyota is on track for roughly a 40 percent jump in annual sales of gasoline-electric vehicles in Europe.

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Toyota’s Europe dilemma was a product mismatch rather than a regulatory crisis. At the beginning of the decade, when demand for its Prius was surging in other markets like the U.S., the model barely attracted buyers in Europe, where more than half of industrywide sales are diesels. After Volkswagen’s scandal undermined those powertrains, Toyota’s strategic decision to avoid pitting its models directly against diesel vehicles and force its dealers toward hybrids is now yielding results.

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When you have a strategy driven by necessity and it’s doing the right thing for the customers and the world, it’s a very powerful force,” Schlicht said in an interview. “We kind of had to do it, and that made us focus.

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Eric Felber, a spokesman for the Volkswagen group, declined to comment on the rise in hybrid sales at the expense of diesel cars. Shares of Toyota have fallen 8.7 percent this year, compared with Daimler’s 8.7 percent drop and gains of 2.1 percent at Volkswagen and 2.4 percent at Fiat Chrysler. Eric Felber, a spokesman for the Volkswagen group, declined to comment on the rise in hybrid sales at the expense of diesel cars.