Toyota Motor has once again clinched the title of the world’s best-selling automaker for 2025, achieving a record 10.5 million units in sales. The Japanese automotive giant announced its stellar performance on Thursday, underscoring a robust global demand for its vehicles.
Sales for Toyota and its luxury brand, Lexus, saw a significant increase of 3.7% compared to the previous year. This growth propelled Toyota ahead of rivals Volkswagen Group, which reported 9 million units sold, and Hyundai Motor Group, with 7.27 million units.
A key driver of Toyota’s success, particularly in the United States, has been the strong consumer appetite for hybrid vehicles. Models such as the iconic Prius and the popular RAV4 hybrid have resonated with American buyers, contributing substantially to the company’s overall sales figures. This surge in demand for fuel-efficient options signals a shifting consumer preference, potentially influenced by evolving environmental concerns and fluctuating fuel prices.
Toyota’s performance in the U.S. is particularly noteworthy given the challenging tariff landscape. The company successfully navigated an aggressive tariff regime, which initially saw 25% levies imposed on Japanese automobiles by the U.S. administration, later reduced to 15%. Toyota’s strategy of absorbing a significant portion of these tariff-related costs, rather than fully passing them on to consumers through substantial price increases, appears to have paid dividends. This approach, coupled with a strong focus on local production and stringent cost controls, allowed Toyota to maintain competitive pricing and strong sales momentum in a crucial market.
In the U.S. market specifically, Toyota and Lexus vehicle sales climbed an impressive 7.3% to reach 2.93 million units. This reflects the effectiveness of Toyota’s localized manufacturing strategy, which has been a cornerstone of its global operations for years.
While Toyota had previously estimated that U.S. tariffs would incur a cost of approximately 1.45 trillion yen (around $9.7 billion) for its fiscal year ending March 2026, the company also raised its full-year operating profit forecast. This upward revision was attributed to successful cost-reduction initiatives and robust demand in markets outside of the U.S., highlighting a diversified global sales network.
**Tariffs Continue to Impact Rivals**
The automotive industry’s landscape continues to be shaped by trade policies. In contrast to Toyota’s robust performance, rival Hyundai Motor, while reporting global revenue growth of over 6% in 2025 driven by strong hybrid sales in the U.S., experienced a significant impact on its operating profit. U.S. levies cost the South Korean automaker an estimated 4.1 trillion won, leading to a 19.5% decrease in operating profit compared to the prior year.
Although South Korea and the U.S. had previously agreed to a trade deal that lowered tariffs on most South Korean products, including cars, to 15% starting in November, recent threats to potentially raise these duties back to 25% have introduced further uncertainty. These concerns contributed to a nearly 5% drop in Hyundai’s share price following the announcement.
Hyundai’s reliance on imports for its U.S. sales presents a vulnerability in the current tariff environment. The company indicated that approximately 40% of its U.S. sales were domestically produced in 2025. To mitigate future risks and enhance its competitive position, Hyundai plans to significantly ramp up local manufacturing at its Georgia facilities, aiming to increase domestic production to over 80% by 2030.
Toyota, on the other hand, has a lower reliance on imports for its U.S. market, with only about one-fifth of its sales originating from overseas. This, combined with its proactive investment in U.S. manufacturing expansion, particularly for hybrid vehicles, has positioned it more favorably to withstand trade policy shifts.
Toyota Motor is slated to announce its fiscal third-quarter earnings on February 6. Analysts, based on consensus estimates, anticipate a notable rebound in the company’s operating profits, with projections suggesting a nearly 30% increase from the same period last year. Following the sales announcement, Toyota shares saw a positive response, rising 3% in Thursday’s trading.
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