The world’s top-selling automaker said rising gas prices and stiff competition in China were hurting demand after sales crashed 30% from last May.
Toyota blames gas prices as sales drop in May
Toyota announced global sales, including the Lexus brand, fell 7.2% in May from a year ago to 834,279 units.
May marks Toyota’s fourth consecutive month with lower global sales than the year prior. Although demand remained steady in key markets, including North America, Europe, and Japan, the company said lower sales in China weighed on global results, resulting in an overall decrease in May.
In North America, Toyota sold 280,539 vehicles, about the same as May 2025 (-0.1%). Toyota’s US sales fell 0.6% to 238,800 despite the changeover to the new RAV4, as hybrids and electric vehicles saw higher demand.
Overall demand remained steady in Europe, Toyota said, with 99,597 vehicles sold last month, down 0.3% from May 2025.
In China, one of its biggest and most important global markets, Toyota reported sales dropped 31.7% in May to 102,299 units. The company said, “A challenging market environment, including rising gasoline prices, continued, leading to a year-on-year decrease in sales.”
Toyota sold 579,419 vehicles in China through May 2026, 15% fewer than in the same period last year.
While new joint venture electric vehicles, including the bZ3X, are seeing strong demand, gas-powered vehicles are hurting demand in China.
The bZ3X, which starts at about $15,000 (109,800 yuan), was China’s top-selling joint-venture EV in April, marking its seventh consecutive month as the top seller.
Electrek’s Take
Toyota, through its joint venture partners, sells electric models, including the bZ3 sedan, bZ3X SUV, and most recently, the flagship bZ7 sedan.
These EVs are competitive in China, but Toyota also relies heavily on local Chinese suppliers, like BYD, to source vehicle components and technology.
Toyota’s internal combustion engine (ICE) sales in China have been steadily declining, not just due to higher gas prices but also as buyers shift to more advanced, more efficient battery-electric vehicles.
And it’s not just in China. After introducing the updated bZ in the US, which is still sold as the bZ4X in global markets, Toyota’s electric SUV became America’s third-most-popular EV in the first quarter.
Since Toyota doesn’t provide a monthly model-by-model sales breakdown in the US, we’ll have to wait for Q2 results.
Toyota now sells three electric SUVs, including the smaller C-HR (C-HR+) and off-road-focused bZ Woodland (bZ4X Touring). Later this year, it will add the Highlander BEV and Lexus TZ three-row electric SUVs.
Despite this, Toyota is sticking to its “multi-pathway” strategy that includes all powertrain options: battery electric (EV), traditional hybrid (HEV), plug-in hybrid (PHEV), and internal combustion engine (ICE).
The strategy may work for now, but you can already see cracks forming in key global markets like China.
China was the first mover, but Toyota is starting to lose market share in other regions, such as Southeast Asia, another key battleground.
BYD, on the other hand, is focused solely on plug-in and pure-electric tech, which helped propel it to become the sixth-largest automaker globally last year.
Within the next five years, BYD’s CEO, Wang Chuanfu, said earlier this month that the company will “truly become the No. 1 automaker globally in terms of scale.”
Will BYD catch up to Toyota over the next five years? Let us know your thoughts in the comments below.
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