Even after the United States and Iran signed a cease-fire memorandum of understanding (MOU), uncertainty around the Strait of Hormuz has continued, prompting Toyota, a global automaker, to further cut production volumes.
According to Nikkei Asia on the 24th (local time), Toyota plans to reduce production outside Japan by about 100,000 vehicles through Feb. 2027. After U.S. and Israeli airstrikes on Iran, crude oil and logistics shipments through the Strait of Hormuz were disrupted, pushing up fuel prices, and as a result, auto demand in key markets such as China and the Middle East has slowed.
According to the outlet, Toyota has already notified major parts partners of the revised production plan. Earlier, in response to weaker demand in the Middle East, the company reduced production of vehicles for export to the region by about 40,000 units in March–April this year. It had planned to cut overseas production by about 83,000 units from June to November, but as consumer weakness from high oil prices has lasted longer than expected, it decided to expand the scale of the cuts.
The hit to the Chinese market has been particularly large. In China, electric vehicles have become mainstream, but auto sales remain sluggish amid an economic slowdown and weaker consumption. Toyota plans to reduce production of the gasoline models RAV4 sport-utility vehicle (SUV) and Avalon sedan, while also scaling back production of the electric models bZ3X and bZ7, as well as the Camry.
The Middle East market is also contracting. According to the Nihon Keizai Shimbun, the number of vehicles Toyota exported to the Middle East in April fell 92% from a year earlier to 2,418.
However, Toyota plans to expand some production in Japan. In the second half of this year, Toyota will increase Japan production by 4,200 units from the original plan. It will reduce production of the Lexus ES due to weaker demand in China, but will increase production of the RAV4 and Land Cruiser 250.
Recently, as the United States and Iran signed a cease-fire MOU, expectations have grown for the reopening of the Strait of Hormuz, but consumers still appear to be feeling the burden of high energy prices.
Nikkei Asia said, "Prospects for the strait's reopening have improved, but as high oil prices persist, consumers are postponing car purchases." Despite expectations for logistics normalization, rising fuel prices are denting consumer sentiment, causing demand for durable goods such as automobiles to be hit first.
Toyota had initially planned to produce about 10 million Toyota and Lexus vehicles in fiscal 2026 (April 2026–March 2027). That is up 1% from the previous year. However, it projected net profit for the same period at 3 trillion yen (28 trillion won), down 22% from the previous year. As a result, there is a view that if high oil prices and weak demand last longer than expected, the performance burden could grow further.