China Dragged Toyota to Its First Sales Drop in Two Years

Toyota sold 5,059,014 vehicles worldwide between April and September, 4.0 percent fewer than a year earlier and its first decline over a fiscal first half in two years.

A 25 percent slide in China wiped out gains in Japan and North America. The figures, released Thursday, cover Toyota and Lexus together and stop short of the record 5,267,388 vehicles the company sold in the same six months of 2025. Sales outside Japan fell 6.5 percent to 4,256,216, and September was the eighth month in a row that overseas sales came in below the year before. Worldwide production slipped 1.9 percent to 4,895,406 vehicles over the half, also the first drop in two years, even though Toyota’s Japanese plants built 6.0 percent more.

Toyota attributes the decline to one market. Although demand remained steady in North America and Japan, the company says, sales in China declined, resulting in an overall decrease. Toyota sold 684,903 vehicles in China over the six months, down from 914,342, and it says the Chinese market remained weak due in part to rising gasoline prices, with gasoline and hybrid vehicles hit hardest. Production in China fell 17.5 percent to 663,079. Asia as a whole was down 13.9 percent, and the Middle East, where Gulf sales dropped by 41 percent, fell 35 percent.

North America went the other way. Toyota sold 1,538,839 vehicles in the region over the half, up 1.8 percent, and 1,307,194 of them in the United States, up 0.9 percent from 1,295,606. Canada rose 8.7 percent to 150,056 and Mexico 6.8 percent to 65,825. The pace picked up at the end of the period, with September US sales of 201,306 running 8.4 percent ahead of the year before, which Toyota credits to solid demand for hybrids and key models such as the Corolla and the RAV4. Europe edged up 1.4 percent to 594,913.

Japan was the strongest market of all. Domestic sales rose 12.4 percent to 802,798, the first first-half increase in three years, and Toyota says buyers who had held off registering cars ahead of a planned abolition of the country’s environmental performance tax came back, on top of strong demand for the new RAV4, the bZ4X and the Land Cruiser FJ. Japanese production rose to 1,680,054 and exports from Japan climbed 4.7 percent to 1,048,190, with 323,290 of them bound for the United States, up 6.3 percent.

The opposite happened at Toyota’s American factories. North American production fell 1.7 percent to 1,124,422 over the half, and US output dropped 3.0 percent to 694,836, with the Canadian and Mexican plants roughly flat. Toyota describes North American production as broadly in line with the previous year, supported by solid demand for hybrids. Taken together, the numbers mean that a larger share of what Toyota sold in the United States this year came off a ship from Japan.

Electrified vehicles kept gaining ground as the overall total shrank. Toyota sold 2,811,154 hybrids, plug-ins, battery EVs and fuel cell cars over the six months, up 14.2 percent, and they made up 55.6 percent of global sales against 46.7 percent a year earlier. Conventional hybrids rose 8.4 percent to 2,368,674, plug-in hybrids 33 percent to 129,977, and battery electric sales more than doubled to 230,764, helped by the bZ4X’s Japanese launch, which took battery electric sales at home from 318 to 16,308. Fuel cell sales fell 9 percent to 363.

Lexus had a harder half than the Toyota brand. Global Lexus sales fell 10.5 percent to 401,042, with North America down 2.4 percent to 202,847, Asia down 25 percent to 90,788, and the Middle East down 39 percent to 13,449. September was better for the brand in America, where Lexus sales rose 13.5 percent to 33,588.

Toyota’s group total, which now counts only Toyota and Daihatsu because Hino’s figures are no longer included from April, came to 5,381,058 vehicles sold and 5,476,448 built. Daihatsu’s own sales were flat at 322,044.

The Toyota Report Take

A 4 percent drop sounds worse than it is, because the half it is measured against was the best Toyota has ever had, and the only market that actually broke was one where Toyota has been losing ground to domestic brands for years. The numbers that matter for American readers point the right way: US sales up for the half and up sharply in September, hybrids now more than half of everything Toyota sells, and Lexus finally growing again in the fall. The uncomfortable figure is US production, which fell while imports from Japan rose, in a year when every imported car carries a tariff. Toyota will have to explain that one when it reports its quarterly earnings, and the explanation will say a lot about how quickly the American plant expansions it has announced this year come on line.

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