Toyota's Sales Remain Strong Amid Challenges

Toyota's vehicle sales continue to show resilience. On July 31, it was reported that Toyota has achieved record global production and sales in the first half of this year, driven by strong demand in markets such as North America, Japan, and China. From January to June, Toyota's global sales increased by 5.5% year-on-year, surpassing 5.1 million units, with hybrid vehicles in high demand, accounting for approximately 43% of total global sales during the same period. Additionally, Toyota's global production rose by 5.8% year-on-year to 4.9 million units. In June, Toyota's global sales grew by 1.7% to 867,906 units, while production increased by 7.4% to 854,565 units. Including its subsidiaries Daihatsu and Hino, Toyota's global sales in June rose by 2.7% to 937,246 units, with production up 7.7% to 963,455 units. In the first half of the year, Toyota's global sales rose by 7.4%, exceeding 5.5 million units, while global production increased by 8.8% to 5.5 million units, with domestic production in Japan seeing an increase of nearly 20%. After three years, Toyota set a new record for sales in the first half of the year and is expected to surpass Volkswagen's approximately 4.41 million units, maintaining its position as the world's top automaker for six consecutive years. However, uncertainty surrounding U.S. tariff policies looms over Toyota's future development. According to a Bloomberg report on May 12, Toyota may become the 'biggest loser in the global automotive industry' due to tariffs imposed by the U.S. Toyota is one of the companies exporting the most vehicles to the U.S., and the impact of tariffs on cars and parts is expected to result in greater losses than for its competitors. Historically, the U.S. auto market has been a crucial strategic market for Japanese automakers. Bloomberg Industry Research indicates that last year, the U.S. market accounted for 23% of Toyota's global sales, 28% of Nissan's, and 71% of Subaru's. Last year, Japanese automakers sold approximately 5.9 million vehicles in the U.S., with about half being imports. 'Toyota has become a target of the Trump administration, which means that the automaker will significantly affect the still-stalled U.S.-Japan trade negotiations,' Bloomberg reported. U.S. tariffs are expected to have a negative impact on Toyota's future market performance and financial results, a concern that Toyota itself has not shied away from addressing. For the 2026 fiscal year, Toyota has projected an operating profit of 3.8 trillion yen, far below analysts' previous expectations of 4.7 trillion yen, and lower than the fiscal year 2025 figures. A net profit of 3.1 trillion yen is anticipated, a decline of 34.9% compared to fiscal year 2025. The company cited the negative influence of U.S. tariff policies and the appreciation of the yen against the dollar as major reasons for the expected significant decrease in net profit. Will tariff relief allow Toyota to breathe easier? In response to the constraints of U.S. tariffs, Japan and Toyota are not remaining idle. According to CCTV news, on July 22, U.S. President Trump announced via social media an agreement with Japan to lower the originally planned 25% reciprocal tariff rate to 15%, with Japan committing to invest $550 billion in the U.S. and opening its market for agricultural products like rice. Trump also stated that Japan would open its market for trade, including automobiles, trucks, rice, and other agricultural products and goods. Notably, shortly after this announcement, on July 31, Toyota expressed in a statement its hope for continued improvement in U.S.-Japan relations and called for further tariff reductions. Toyota stated, 'Toyota hopes that under the principles of fair and open trade, the development environment for the automotive industries of Japan and the U.S. can continue to improve, including further tariff reductions.' Currently, it appears that Toyota is not fully satisfied with the reduced tariff rates. The impact of U.S. tariffs on Toyota is extensive and profound, affecting costs, profits, market strategy, and global supply chains. In terms of costs and profits, U.S. tariffs are like a sword hanging over Toyota's profit margins. As previously noted, Toyota has expressed a pessimistic outlook for its financial performance in the 2026 fiscal year. From a market strategy perspective, to cope with the cost pressures of tariffs, Toyota has had to make significant adjustments to its market strategy. Currently, Toyota is adjusting the pricing of its vehicles in the U.S. In June, it was reported that Toyota plans to raise prices for its Toyota brand vehicles in the U.S. by an average of $270 per vehicle, a decision based on market trends and competitor pricing strategies. Subsequently, on July 8, it was reported that Toyota is considering exporting vehicles produced in the U.S. back to the Japanese market or introducing vehicles produced by U.S. brands into its Japanese dealer network. Overall, while the recent U.S.-Japan trade agreement provides Toyota with a slight respite, the company still faces intense competition from electric vehicle manufacturers led by Tesla and BYD. So far this year, Toyota has only sold about 82,000 pure electric vehicles, with most deliveries coming from overseas markets, indicating a noticeable lag in its electrification transition in the Japanese domestic market.