Toyota plans major US investment following strong output, sales

Tariffs have changed the economic landscape for the entire U.S. automotive industry.

Japanese automakers were particularly affected by the 27.5% duties imposed on their exports to the United States.

Top auto importers to U.S. in 2024

• Mexico: 22.8%
• Japan: 18.6%
• South Korea: 17.3%
• Canada: 12.9%
• Germany: 11.7%

According to World’s Top Exports count, nearly 20% of the money U.S. consumers spent on auto imports went to Japanese car companies. The only country with a higher percentage was Mexico. 

However, many of the vehicles Japanese automakers sell in the U.S. are actually manufactured here.

Last year, Japanese auto manufacturers produced 3.28 million vehicles in the U.S.

Honda, Subaru, Nissan, Mazda, and Toyota combined employed nearly 75,000 manufacturing workers in the U.S. last year, according to the Japan Automobile Manufacturers Association.

Japan was able to renegotiate its tariff burden in July to 15%, but the lower rate is retroactive only until September 16.

Toyota sold over 2.3 million vehicles in the U.S. in 2024, a 3.7% year-over-year increase.

Of the 2.4 million vehicles Toyota sold worldwide in the first quarter of FY 2026, nearly 800,000 of those sales came from North America, making it Toyota’s most important region by far.

On Thursday, the Japanese auto giant gave an update on its October sales that showed its strongest region is getting even stronger.

Toyota reports fifth straight month of increased U.S. output

Toyota is riding a wave of U.S. demand for hybrid electric vehicles to a streak of increased sales and production, according to its October sales figures.

Toyota's global output increased 4% year-over-year to 926,987 cars, as worldwide sales rose 2% to 922,087 vehicles. It is the tenth consecutive monthly sales gain for the automaker.

Related: Toyota makes a major bet on US manufacturing

Toyota was able to achieve this despite weaker sales in Japan and China, thanks to a 26% increase in U.S. production in October. This is the fifth consecutive double-digit sales increase in the U.S. for the company.

Toyota sold 207,910 vehicles in the U.S. in October.

Meanwhile, Japan's output rose 7%, even though sales declined 4%, and China's production dropped 6%, as sales fell 7%.

Toyota sold 8.7 million vehicles globally through the first 10 months of the year, with hybrids making up 42% of those sales, battery electric vehicles making up 2%, and internal combustion engine vehicles making up the rest.

Toyota sold 185,748 Toyota and Lexus vehicles in the U.S. in September, a 14.2% year-over-year increase in volume, according to a press release. For the third quarter, Toyota North America reported sales of 629,137 vehicles, a 16% increase.

Toyota to invest another $1 billion in U.S. manufacturing

The U.S. is Toyota's most important region, and North American new vehicle sales rose by 89,000 units to 794,000 in the second quarter.

However, Toyota’s operating income in North America fell by $1.1 billion from a profit a year ago to a net loss of $438 million.

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Top-selling car brands in the U.S. in 2024

• GM: 2.68 million vehicles, +4.2% year over year, market share 16.5%
• Toyota: 2.33 million vehicles, +3.9% YoY, market share 14.4%
• Ford: 2.05 million vehicles, +3.8%, market share 12.7%
• Hyundai: 1.68 million vehicles, +1.8% YoY, market share 10.6%
• Honda: 1.4 million vehicles, +8.1% YoY, market share 8.4%

North America was the only one of Toyota’s six operating regions to incur a loss. However, due to a $4.4 billion profit in Japan and a $1.1 billion operating profit across Asia, Toyota was able to report an overall quarterly profit of $5.8 billion, down from the $8.5 billion it reported in the same quarter a year ago.

So Toyota has a plan that will allow it to keep more of the money it makes from U.S. sales.

As part of the company’s $10 billion U.S. manufacturing commitment over the next five years, Toyota has announced a plan to invest $912 million in building hybrid capacity across five manufacturing plants.

The move is part of Toyota’s plan to increase production of the hybrid-electric Corolla.

“Customers are embracing Toyota’s hybrid vehicles, and our U.S. manufacturing teams are gearing up to meet that growing demand,” said Kevin Voelkel, senior vice president, manufacturing operations.

“Toyota’s philosophy is to build where we sell, and by adding more American jobs and investing across our U.S. footprint, we continue to stay true to that philosophy.”

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