Toyota Global Sales Decline in First Half of 2026, First Drop in Two Years, Hit by Weak China Market and Middle East Tensions

Toyota Motor Corporation announced on Thursday (30th) its latest operational data, revealing that both global sales and production declined in the first half of 2026—the first such drop in two years.

According to the report, Toyota’s global sales from January to June 2026 fell 2.9% year-on-year, totaling slightly over 5 million units. Global production also contracted by 1.2%, dropping below 4..9 million units.

One of the core factors behind the sales decline is weakness in the Chinese market. Toyota’s sales in China dropped 17.1% in the first half, offsetting strong demand in North America and Japan. In June alone, sales of Toyota and its luxury brand Lexus in China fell 27% compared to the same month last year. Toyota noted that the Chinese market is facing intense competition from electric vehicle manufacturers such as BYD.

Additionally, geopolitical tensions in the Middle East have impacted performance. Ongoing conflicts over several months between the U.S., Saudi Arabia, and Iran have driven up raw material and oil costs and disrupted supply chains. Toyota’s sales in the Middle East fell 24% in June. The company previously estimated that nearly half of the 500,000 to 600,000 vehicles it exports annually to the Middle East would be affected by the situation.

Despite the overall decline, Toyota’s performance in the North American market remained robust, driven by strong demand for hybrid vehicles and other models. However, the ongoing model changeover of the popular RAV4 also somewhat dampened production and sales results in the first half.

Toyota’s record profits are beginning to erode due to supply chain disruptions and intensifying competition. The company forecasts that its operating profit for the fiscal year ending March 2027 will fall to 3 trillion yen (approximately $18.4 billion) from the previous year’s 3.8 trillion yen, due to rising raw material costs—below analysts’ expectations.

Toyota stated that, as part of its transformation into a mobility services company, it will continue to focus on developing safe, environmentally friendly, and inclusive mobility solutions.