Toyota first-half sales fall 2.9% as China weakness, RAV4 shift weigh

Toyota Motor reported first-half global sales fell 2.9% to just over 5 million vehicles, the first decline in two years as weaker demand in China and a model changeover for its popular RAV4 sport utility vehicle weighed on results.

The Japanese automaker's China sales dropped 17.1% during the period, the company said Thursday, reflecting intense competition from local rivals and shifting consumer preferences in the world's largest auto market. Stronger demand in North America and Japan helped cushion the overall decline, with Toyota's domestic market and U.S. operations showing resilience against the broader downturn.

Global vehicle production slipped 1.2% to just under 4.9 million units in the first half, affected by the transition to the latest version of the RAV4, one of Toyota's best-selling models and a key contributor to its worldwide sales volume. The figures include both Toyota-brand vehicles and luxury Lexus models, providing a comprehensive view of the company's global operations.

Toyota showed signs of stabilization in June, with global sales edging up 0.1% to 868,454 vehicles and production rising 2.9% to 879,321 units. Including subsidiary Daihatsu Motor Co., June sales fell 1.1% to 926,688 while production climbed 2.2% to 984,408, according to Bloomberg data. The monthly improvement suggests manufacturing activity is recovering after the RAV4 retooling disrupted output earlier in the year.

The first-half decline shows that Toyota faces persistent headwinds in China, where local automakers led by BYD Co. are gaining market share with aggressive pricing and rapid adoption of electric and plug-in hybrid vehicles. Middle East turmoil also contributed to the sales weakness, with geopolitical instability affecting demand across the region, Bloomberg reported. The challenges in China contrast with the broader global auto market, where hybrid vehicle sales have driven growth in the second quarter of 2026.

Investors will watch whether improving production levels following the RAV4 changeover and resilient demand in North America and Japan can support a recovery in the second half. Toyota's next catalyst will be its full-year earnings report, where management is expected to provide updated guidance reflecting the first-half performance and second-half outlook.

This article is for informational purposes only and does not constitute investment advice.