Toyota and Japanese automakers see sharp sales decline in China 2026

Toyota reported a 31.7% year‑on‑year drop in May 2026 sales in China, selling 102,299 vehicles, while its global sales fell 7.2% to 834,279 units. In the first half of 2026 Toyota’s Chinese sales fell 17.1% to 694,700 cars, Nissan slipped 15.0% to 237,000 units, and Honda plunged 34.7% to 205,800 units.

The slowdown is linked to higher fuel prices after Middle‑East tensions, which reduced gasoline demand, and fierce competition from local Chinese brands that are advancing rapidly in electric‑vehicle markets. Toyota blamed “rising gasoline prices” despite Chinese fuel being cheaper than in Europe, while analysts point to the faster EV transition and aggressive pricing by Chinese manufacturers as the main threat.

Honda’s situation is acute: June 2026 sales fell 44.5% year‑on‑year, marking 29 consecutive months of decline. The firm has halted production at Guangqi Honda’s Guangzhou plant and plans to close Dongfeng Honda’s Wuhan facility in 2027. Toyota’s global EV sales rose 170% in May, with the bZ3X becoming the top joint‑venture EV in China for the seventh month, but the gains have not offset the steep fall in gasoline‑car sales.

Financially, Toyota’s operating profit slipped 21.5% to ¥3.76 trillion, partly due to US tariffs costing ¥1.4 trillion and a first‑time North American loss in 16 years. The company’s CEO warned that without strategic changes, the firm’s future could be at risk.