The turbulent situation in the Middle East compounded sluggish sales in China Toyota Motor (TM.US) sales declined for the fifth month in a row

The Zhitong Finance App learned that due to the double impact of the turbulent situation in the Middle East and sluggish sales in China, Toyota Motor (TM.US) experienced a fifth consecutive month of decline in sales. The world's largest car manufacturer said in a statement on Thursday that including its subsidiary Daihatsu Motor, global car sales fell 1.1% year on year to 9266.88 million units in June; global car production increased 2.2% year on year to 984.08 million units in June.

Sales of Toyota and Lexus brands declined year-on-year in June, with the Middle East region falling 24% and the Chinese market falling 27%. When Toyota announced its earnings report in May, the automaker said that the company exports about 500,000 to 600,000 cars to the Middle East every year, and it is expected that slightly less than half of these sales will be affected.

As the conflict between the US and Iran escalates for several months, soaring oil prices and raw material costs combined with blocked supply routes, global manufacturers are facing increasing pressure. Japanese automakers have been particularly affected, as they are highly dependent on the Middle East market. At the same time, the fierce competition brought about by electric vehicle manufacturers such as BYD has further intensified the fluctuation in Toyota's sales volume in the Chinese market.

However, Toyota said in a statement: “Strong demand in the North American and Japanese markets was offset by declining sales in the Chinese market. Demand for hybrid models and other models remains strong in the North American market.”

Supply disruptions, compounded by fierce competition in the Chinese market, have begun to erode Toyota's record profits in the last fiscal year. According to financial reports, revenue for the fourth fiscal quarter ending the end of March was 12.60 trillion yen, up 1.9% year on year, in line with market expectations; however, operating profit plummeted 49% to 569.4 billion yen, far lower than market expectations of 813.28 billion yen. Toyota's operating profit has been declining for the fourth consecutive quarter year-on-year, reflecting a slowdown in sales in China, increased market competition, and continued pressure from US tariffs.

Toyota expects profit for the fiscal year ending March 2027 to decline as the company prepares for higher raw material costs due to supply disruptions. Toyota expects operating profit to reach 3 trillion yen (about 18.4 billion US dollars), lower than analysts' expectations, and lower than the 3.8 trillion yen operating profit achieved during the previous 12 months.