Toyota Hits Record October Sales as US Hybrid Demand Offsets China Slump
- Toyota achieved record global sales and production in October, with a 12% sales surge in the US offsetting significant declines in the Chinese and Japanese markets.
- The automaker raised its annual profit forecast to ¥3.4 trillion, demonstrating financial resilience despite anticipating a ¥1.4 trillion cost impact from new US tariffs
- High demand for hybrid vehicles, which now make up 42% of total sales, drove a 26% spike in US production, validating Toyota's strategy to prioritize hybrids over fully electric vehicles.
Toyota Motor Corp. has demonstrated remarkable resilience in the face of shifting global economic tides, posting record sales for October. The world's largest automaker reported a 3% increase in global sales, reaching 1 million units when including its subsidiaries Daihatsu and Hino. This performance was underpinned by a robust appetite for vehicles in North America, which effectively neutralized significant downturns in the Chinese and Japanese markets. The figures highlight Toyota’s ability to navigate a complex landscape defined by looming tariffs and geopolitical friction.
The driving force behind this growth is undeniably the United States, where Toyota and Lexus sales surged by nearly 12%. American consumers continue to flock to the brand’s hybrid offerings and the perennial best-seller, the RAV4 compact crossover. This demand has sparked a manufacturing boom as well; production in the US skyrocketed by 26.4% to over 137,000 units. This surge is partly a recovery from production suspensions caused by recalls last year, but it primarily reflects a strategic victory for Toyota’s hybrid-focused lineup, which now accounts for 42% of its total vehicle sales year-to-date.
In stark contrast, Toyota’s fortunes in Asia are facing significant pressure. Sales in China slumped by 6.6%, while production there dropped by 6.4%. The decline is attributed to the expiration of government subsidies in several regions, but geopolitical tensions are also playing a crucial role. Recent comments by Japanese Prime Minister Sanae Takaichi regarding Taiwan have prompted retaliatory diplomatic and economic measures from Beijing, complicating the business environment for Japanese firms. Similarly, sales in the domestic Japanese market fell by 4.2%, suggesting a cooling of local demand.
Despite these regional challenges, Toyota’s global production machine is firing on all cylinders. Global output rose by roughly 4% to nearly 927,000 units, marking a record high for the month of October and the fifth consecutive month of production gains. Domestic production in Japan actually grew by nearly 7%, a vital sign of recovery following the certification scandals that plagued the company earlier in 2024. This indicates that while Japanese consumers may be buying less, the factories are back to full capacity to feed export markets.
Financially, the company is proving to be robust against external shocks. Toyota recently raised its annual operating profit guidance to ¥3.4 trillion for the fiscal year ending in March. This upgrade comes even as the automaker braces for a substantial ¥1.4 trillion hit to its bottom line anticipated from President Donald Trump’s new 15% tariffs on imported cars and parts. The ability to forecast higher profits despite such a massive tax burden underscores the efficiency of Toyota’s supply chain and the high margins commanded by its popular hybrid models.
The data also reveals a divergence in performance among Toyota's subsidiaries. While the main brand is thriving, Hino Motors saw production plunge by 25% due to double-digit drops in both domestic and overseas regions. Daihatsu fared better, with a 19.5% jump in sales driven by strong performance in Japan, though this was partially offset by weaker production figures abroad. These mixed results highlight that the commercial vehicle sector remains volatile compared to the passenger car segment.
Ultimately, Toyota’s October performance serves as a validation of its diversified global strategy. By not putting all its eggs in the full-electric vehicle basket—battery EVs made up just under 2% of sales—and instead focusing on hybrids, Toyota has aligned itself perfectly with current US consumer preferences. As the company navigates the "trade war" rhetoric from Washington and diplomatic frostiness from Beijing, its reliance on the North American consumer has become its most vital safeguard.