What changed
Toyota’s global sales fell 2.9% in September from a year earlier to 921,847 vehicles, while production dropped 4.5% to 989,168. Toyota and Lexus sales in China fell 20%, extending an eight-month decline; sales rose 1.8% in Japan and 8.6% in North America.
Why it matters
Toyota is being pulled in two directions. Hybrids are cushioning the business in Japan and North America, and the company expects hybrid sales to exceed 5 million vehicles in 2026. But China is exposing a deeper weakness: buyers are turning toward battery-powered cars from Chinese brands that compete on features and onboard software, while higher fuel prices weigh on demand for non-electric vehicles.
The pressure is broader than Toyota. Honda’s China sales fell 53% in September, while Nissan’s plunged 62%; Nissan’s global sales fell 10%. That makes Toyota’s China problem look less like an isolated stumble and more like a difficult shift in what the market wants.
Toyota still has financial room to absorb the strain. It raised its fiscal-year profit outlook to ¥3.4 trillion in August, helped by U.S. demand for hybrids and favorable currency movements. The clearest reading is that hybrids can protect earnings for now, but they do not remove the competitive challenge in China. If the eight-month slide continues, Toyota’s strength in hybrid technology will be tested against a market increasingly rewarding electric vehicles and software.
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