On the Dash:
- Ongoing disruptions in the Middle East could tighten vehicle supply and increase production volatility across the industry.
- Toyota continues to see strong consumer demand despite softer global sales and longer wait times for key models.
- Rising raw material and logistics costs may pressure future pricing, incentives and inventory availability.
Toyota posted its third consecutive month of year-over-year global sales declines in April as ongoing conflict in the Middle East disrupted exports, strained supply chains, and pressured profitability.
The automaker said Thursday that global sales, including subsidiary Daihatsu, fell 3.7% to 902,015 units in April. Global production, however, rose 3.4% to 933,685 units.
Export disruptions
Toyota’s exports to the Middle East dropped 92% year over year to 2,418 vehicles as regional tensions continued disrupting shipping routes through the Strait of Hormuz. Despite the challenges, Toyota has kept factories operating, while competitors across the industry continue to reassess production and investment plans tied to electric vehicles and global supply chains.
Earlier this month, Toyota forecast a decline in operating profit for the fiscal year ending March 2027. The company projected operating income of ¥3 trillion ($18.8 billion), down from ¥3.8 trillion in the previous fiscal year and below analyst expectations. Executives cited rising raw material costs and supply disruptions linked to the conflict in Iran as major contributors to the weaker outlook.
Toyota accounting chief officer Takanori Azuma previously said the company exports roughly 500,000 to 600,000 vehicles annually to the Middle East and estimated that slightly less than half of that volume could be affected by the regional conflict.
The automaker also warned that supplier shortages are beginning to emerge. Toyota estimated the disruptions could reduce its bottom line by ¥670 billion. On Monday, the Nikkei reported that Toyota plans to increase overseas production cuts to around 83,000 units due to logistical problems stemming from regional tensions.
China sales
Despite the sales decline, Toyota said global consumer demand remains strong, with customers waiting months for some models in major markets. Sales comparisons also faced tougher year-over-year conditions after buyers rushed purchases last year ahead of tariffs and the launch of the redesigned RAV4.
Toyota’s sales in China fell 25% in April as Japanese automakers continued struggling in the market. Honda’s global sales dropped 7.9% to 265,215 units, while Nissan reported a 7.6% decline to 208,663 units.
