Toyota may still be the world’s largest automaker, but it’s heading into another earnings report moving in the wrong direction. After facing four consecutive months of declining international sales, June finally broke the trend with a modest 0.1% increase. However, the Japanese automaker’s challenges are far from over.
Toyota is expected to post its fifth consecutive quarterly profit decline. Weaker global sales, rising costs, natural disasters, and production disruptions are all weighing on its bottom line despite continued strength in key markets like the United States and its home market.
Toyota’s Sales Slump
Kristen Brown
Analysts surveyed by LSEG expect Toyota to report operating profit of around 1.11 trillion yen ($7.04 billion) for the April to June quarter, roughly 5% lower than the same period last year. If forecasts prove accurate, it will mark the company’s fifth straight quarter of declining profits, reflecting the automaker’s recent slowdown in global sales.
Worldwide deliveries, including Lexus models, fell 2.9% year-over-year during the first half of 2026, with global Q1 sales slipping to just over 2.5 million vehicles. China remains Toyota’s biggest weak spot, with sales dropping 17.1% as “challenging market conditions and rising gasoline prices continued to hurt demand.” The Middle East also recorded a sharp decline, while weaker performances in Oceania and Latin America added further pressure.
The U.S. Keeps Delivering
Toyota
Fortunately for the legacy automaker, not every market is struggling. Toyota’s U.S. sales edged up 0.5% during the first half of the year thanks to continued demand for hybrid models and popular vehicles like the Camry and 4Runner. The latter posted an impressive 141% year-over-year increase compared to the first half of 2025.
In Japan, sales climbed 4.7%, helped by strong demand for newer models including the RAV4 and bZ4X. Overwhelming demand has also created long waiting lists, with Toyota estimating it could miss out on roughly 55,000 U.S. sales this year because it can’t build enough vehicles to meet customer demand.
Toyota’s EV Business Is Booming
The company is also seeing impressive momentum in electric vehicles. Toyota’s EV sales in America more than doubled this year, highlighting growing demand for its battery-powered models.
During the first half of the year, Toyota’s global hybrid sales increased by 4.4%, while plug-in hybrid sales climbed 2.7%. Surprisingly, all-electric vehicles recorded the biggest gain of all, soaring 135.3% year over year.
That said, Toyota’s near-term outlook has become more complicated after last week’s earthquake on Japan’s Kyushu island disrupted parts suppliers and forced the automaker to temporarily suspend domestic production. Investors will also be watching closely to see whether Toyota revises its full-year operating profit forecast of 3 trillion yen as higher material costs and supply chain disruptions continue to cloud the company’s outlook.
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