Toyota’s global sales fell for the fifth consecutive month in June, as the Middle East war and an intensifying price war in China ate into the profits of the world’s biggest automaker.
The company sold 926,688 vehicles worldwide in June including its Daihatsu subsidiary, down 1.1 percent from a year earlier. Production rose 2.2 percent to 984,408 vehicles, but the gap between production and sales points to inventory building rather than strong demand.
The geography of the decline tells the story. Toyota and Lexus brand sales dropped 24 percent in the Middle East and 27 percent in China. North America and Japan remained solid, driven by strong hybrid demand, but they could not offset the losses elsewhere.
The Middle East collapse is directly linked to the US-Iran war, now in its third month. Toyota exports between 500,000 and 600,000 vehicles annually to the region. The company expects slightly less than half of that volume to be affected by the conflict, which has driven up oil and raw-material costs while disrupting supply routes through the Strait of Hormuz.
China is a different problem. Toyota faces relentless competition from BYD and other domestic electric vehicle manufacturers who have slashed prices and flooded the market with new models. Chinese consumers are choosing local brands over foreign ones at a rate that has caught every legacy automaker off guard. Toyota’s 27 percent sales drop there is the steepest among major Japanese carmakers; Honda saw a 44 percent plunge in China, while Nissan’s global sales fell 8.3 percent.
The financial impact is already visible. Toyota forecast operating profit of 3 trillion yen ($18.4 billion) for the fiscal year ending March 2027, below analyst estimates and well short of the 3.8 trillion yen posted in the previous 12 months. The company cited higher raw material costs driven by the Middle East disruptions.
The combined pressure marks a reversal from the record profits Toyota posted during the post-pandemic recovery, when supply constraints and strong demand created a seller’s market. That era is over. The Iran war has severed a major market and raised input costs simultaneously. China’s EV offensive shows no sign of easing. Toyota, for all its manufacturing prowess, cannot control either of those forces.