One major reason is that diesel engine passenger cars aren't popular in Japan, and are pretty much rare in the US (except for VW's and we know how that turned out). Pollution regs aren't going to go away IMHO, and diesels are HARD to clean up.

Toyota put its bet on hybrid petrol/electric cars, rather than diesel or full-electric cars. So far, it's worked out pretty well, and it would seem that they are looking at full-electric and hydrogen fuel cell vehicles as the next generation.

Toyota replaced its AD engines with BMW N47 ones in Europe. Why? I do not know but I am familiar AD series had bunch of problems and think that should not be reason for such decision. As I know, Toyota still makes other series of diesel engines.