Toyota Sales Fall 4% as China Slump Outweighs Record Demand in North America and Europe

China losses overwhelm gains in Toyota's strongest markets

Toyota Motor sold 5,059,014 Toyota and Lexus vehicles worldwide between April and September 2026, down 4.0% from a year earlier, as a sharp decline in China outweighed record sales in North America and Europe. The figures, announced on October 29, marked the first decline in first half sales in two years.

China sales fell 25.1% to 684,903 vehicles, while sales in the Middle East dropped 35.1% to 187,802. Higher gasoline prices associated with conflict in the Middle East put pressure on demand for vehicles using gasoline, including hybrids, in China. A slowing economy and competition from domestic manufacturers added to Toyota's difficulties.

North America, Europe and Japan moved in the opposite direction. North American sales rose 1.8% to 1,538,839 vehicles, European sales increased 1.4% to 594,913, and Japan sales climbed 12.4% to 802,798. Hybrids supported demand in North America and Europe, while popular new models helped Toyota in Japan.

The contrast runs through Toyota's results: a technology attracting more buyers in North America is losing customers in China. Toyota's global hybrid sales still rose 8.4% to a record 2,368,674 vehicles, while electric vehicle sales more than doubled to a record 230,764.

How much did China pull down the total?

China accounted for about 13.5% of Toyota and Lexus sales during the six months. Its decline was large enough to outweigh the combined increase in North America, Europe and Japan.

Calculations using the published sales totals and rounded growth rates put China's lost volume at roughly 230,000 vehicles compared with a year earlier. Toyota's worldwide decline was approximately 211,000 vehicles. Gains elsewhere therefore absorbed part of the China loss, even as other markets, including the Middle East and India, also weakened.

Toyota's sales outside Japan fell 6.5% to 4,256,216 vehicles. Japan's increase softened that decline in the worldwide total, showing how much the company's domestic market contributed during a difficult period overseas.

India sales fell 5.0% to approximately 150,000 vehicles. The Middle East's steeper contraction added another source of pressure, leaving Toyota dependent on growth in its larger markets to limit the damage.

Why higher fuel prices helped hybrids in one market and hurt in another

North American hybrid sales rose 20.2% to approximately 779,000 vehicles. That was about half of Toyota and Lexus sales in the region, based on total regional sales of 1,538,839.

A conventional hybrid combines a gasoline engine with an electric motor and a battery. It can use less gasoline than a comparable vehicle powered only by an engine, making it attractive when fuel prices rise. Its battery is charged through the vehicle's operation, rather than requiring the driver to plug it in.

China's buyers showed a different pattern. Toyota's hybrid sales there fell 9.9% to approximately 392,000 vehicles. Hybrids held up better than Toyota's total China business, which fell 25.1%, but still lost ground as buyers shifted toward vehicles powered entirely by batteries.

Chinese manufacturers also competed through vehicle features and onboard software. Toyota faced that competition with an electric vehicle range that struggled to attract enough buyers. For the company, the problem was therefore both the type of vehicle customers wanted and the appeal of its products against local alternatives.

Record electric sales still trail the hybrid business

Toyota's 2,368,674 global hybrid sales represented about 46.8% of Toyota and Lexus deliveries during April through September. Electric vehicle sales of 230,764 represented approximately 4.6%.

Those figures show the different sizes of the two businesses. Toyota sold roughly ten hybrids for every electric vehicle, even as electric sales grew to about 2.3 times their level a year earlier.

The broader category of electrified vehicles, led by hybrids, rose 14.2% to approximately 2.81 million, another record. Electrified vehicles include several technologies using electric motors; the category is wider than cars powered entirely by batteries.

For Toyota, that growth provides a substantial source of demand while total sales are falling. Yet its worldwide success with hybrids has not been enough to reverse the decline in China, where the company's hybrid volume also contracted.

September extends China's decline to eight months

Toyota and Lexus sales in China fell 20% in September, extending the decline there to eight consecutive months. The monthly result showed that the weakness continued through the end of the six month reporting period.

September sales rose 1.8% in Japan and 8.6% in North America. North America's increase was stronger than its 1.8% gain across April through September, providing a brighter result at the close of the period.

Group sales including Daihatsu fell 2.9% in September to 921,847 vehicles, while production declined 4.5% to 989,168. Across the full six months, sales including Daihatsu fell 4.6% to 5,381,058, also the first decline for that period in two years.

Three dates frame the latest developments:

• August 2026: Toyota raised its profit outlook for the fiscal year ending March 2027 to ¥3.4 trillion.
• September 2026: Toyota and Lexus recorded an eighth consecutive monthly sales decline in China.
• October 29, 2026: Toyota announced the April through September sales and production results.

Registrations show pressure on both Toyota joint ventures

China's September insurance registrations provide a closer view of Toyota's locally produced vehicles. FAW Toyota recorded approximately 59,000 registrations, down 11% from a year earlier, while GAC Toyota recorded approximately 49,000, down 34%.

Together, the two joint ventures accounted for about 108,000 registrations during the month. Across January through September, FAW Toyota was down 13% and GAC Toyota was down 15%.

Insurance registrations count vehicles registered when customers buy them in China. This tally covers domestic purchases of locally produced vehicles and excludes imported Toyota and Lexus models. Toyota's company sales figures cover a different set of vehicles, so the two measures give different views of the business.

GAC Toyota's sharper September fall shows that the pressure was uneven within Toyota's Chinese operations. Both ventures, however, were below their levels a year earlier in September and across the first nine months.

China's competition has winners and losers on both sides

Geely recorded approximately 141,000 domestic registrations in September, up 32% from a year earlier. BYD's main brand remained larger at approximately 195,000, but fell 37%.

The same registration figures put Tesla at approximately 64,000 vehicles, down 9% from a year earlier despite a 28% increase from August. SAIC Volkswagen fell 37% to approximately 54,000, while FAW-Volkswagen declined 41% to about 49,000.

Some Chinese brands expanded quickly. ZEEKR reached approximately 25,000 registrations, up 74%, and ARCFOX reached about 19,000, up 24%. Great Wall Motor, by contrast, fell 33% to roughly 46,000.

Toyota is therefore competing in a market where demand is shifting between individual brands as well as between technologies. Geely's growth, BYD's decline and Tesla's mixed monthly performance show how varied the competition has become.

Other Japanese manufacturers also suffered steep China declines in September. Honda's sales there fell 53%, contributing to a 6.5% global decline to 271,402 vehicles. Nissan's China sales dropped 62%, while its worldwide sales fell 10%. Those company sales measures sit alongside, rather than within, the insurance registration tally.

Production falls while Japan cushions the retreat

Toyota's global production fell 1.9% to 4,895,406 vehicles during April through September, its first decline for the period in two years. Production outside Japan dropped more sharply, falling 5.6% to 3,215,352.

Subtracting overseas production from the worldwide total puts Japanese production at 1,680,054 vehicles. That means factories in Japan supplied about 34% of Toyota's output during the six months, while overseas factories supplied about 66%.

Sales and production measure different stages of the business. Production counts vehicles built, while sales count vehicles sold during the reporting period. Vehicles can move through transport and dealer inventories between those stages, so the totals need not match.

Japan also provided support on the demand side. Sales rose to 802,798, the first increase for the period in three years, with new models contributing to the gain. That domestic strength helped cushion falling sales abroad, although it was too small to offset them fully.

Profit expectations rest partly on continued hybrid demand

Toyota raised its profit outlook in August to ¥3.4 trillion for the fiscal year ending March 2027, supported by demand for hybrids in the United States and favorable currency movements. Earlier in the year, the company had expected a rare profit decline as it faced higher raw material costs associated with the Middle East conflict.

Sales volume and profit can move differently. The types of vehicles sold, their prices, manufacturing costs and exchange rates all affect how much money a manufacturer earns. A stronger market for hybrids can therefore support earnings even when the total number of vehicles sold falls.

Toyota also said its hybrid sales were on track to exceed 5 million vehicles for the first time in calendar 2026. That target covers January through December, while the latest sales release covers April through September. The fiscal profit outlook runs through March 2027.

A date for a recovery in China was not given. Toyota's immediate challenge is to sustain the hybrid demand lifting North America and Europe while attracting more Chinese buyers to its electric vehicles. September's eighth consecutive China decline shows the scale of the task.

Key Points

• Toyota and Lexus sales fell 4.0% to 5,059,014 vehicles between April and September 2026.
• China sales dropped 25.1% to 684,903, while Middle East sales fell 35.1% to 187,802.
• North America and Europe recorded their highest sales for the period; Japan sales rose 12.4%.
• Global hybrid sales reached a record 2,368,674, and electric vehicle sales reached a record 230,764.
• Global production fell 1.9% to 4,895,406 vehicles.
• Toyota's China sales decline reached eight consecutive months in September.