The RAV4 changeover will resolve itself quickly, however the cascading penalties of the battle in Iran might take considerably longer. By Stewart Burnett
Toyota reported a 7.3% decline in world automobile gross sales for March 2026, with deliveries falling to 897,871 items together with the premium model Lexus, marking a second consecutive month-to-month drop. The automaker attributed the consequence to 2 key elements: a pointy contraction in Center East gross sales following the outbreak of battle in Iran, and a manufacturing hole created by the changeover from the extremely widespread RAV4’s current-generation mannequin to a 2026 replace.
Gross sales declines have been recorded in nearly each main automotive market: Toyota was down 8.5% within the US, 8% in China, and seven.8% in Japan, with Europe registering a relatively modest 5.6% decline. The steepest regional fall, after all, was within the Center East, the place volumes collapsed almost 33% year-on-year to roughly 34,000 items. The automaker pinned this decline on the US-Israel battle in Iran and its penalties, chief amongst them its impact on transport by the Strait of Hormuz.
In March 2025 Toyota ordered a short lived halt to Japanese manufacturing of automobiles certain for Center East markets. The cease quantities to round 40,000 misplaced items unfold throughout March and April. Different Japanese automakers taking related measures embody Mazda, which has ordered a complete cease on all Center east-bound automobiles till at the least Might. Its whole manufacturing volumes for that area are available round 30,000 per yr.
The RAV4 scarcity added a second layer to the gross sales contraction, significantly within the US. Toyota offered simply 21,693 RAV4s within the US market in March towards 41,509 a yr earlier, with the Kentucky meeting plant but to finish its retooling for the redesigned mannequin. 12 months-to-date RAV4 gross sales within the U.S. stand at 59,869 items, barely half the 115,402 recorded by the identical interval in 2025. Toyota emphasised that the underlying demand stays stable, characterising the shortfall as little greater than a manufacturing transition.
As such, it’s fairly doubtless that the RAV4 hole will shut as soon as retooling efforts are full. The Hormuz disruption, then again, is proving much less transitory. Past regional gross sales, Japanese automakers depend on Gulf-sourced aluminium for a major proportion of their major steel provide. Aluminium sourced from the Center East is used extensively throughout automobile frames, engine blocks, wheels, and battery housings. Output cuts at main Gulf smelters have tightened availability and pushed costs greater, contributing to the three.3% home manufacturing decline Toyota reported in Japan in March.
The disruption is spreading laterally by Toyota’s provide and regional manufacturing community. Pakistan’s Indus Motor Firm, which assembles Toyota automobiles domestically, has warned that part and utterly knocked-down package provides are in danger from Hormuz-related delays.
Hyundai Chief Govt José Muñoz has gone a step additional, confirming a full rerouting of the group’s vessels round Africa—including roughly a fortnight to transport occasions—and warning that the battle has rendered automotive’s long-held assumptions about globally-distributed manufacturing out of date. “Globalisation is over,” he instructed Bloomberg in April. “It’s utterly over.”
Toyota recorded its sixth consecutive yr because the world’s top-selling automaker in 2025, transferring 10.5 million items, and achieved report full-year world gross sales of 10.48 million automobiles within the fiscal yr ended March 2026—its strongest-ever efficiency within the US.
