Toyota reported a drop in sales in March, driven by weaker demand for its top-selling RAV4 ahead of an upcoming refresh of the SUV model.

At the same time, rising tensions in Iran have raised concerns about potential disruptions to key supply chains, which could eventually force automakers to scale back production.

Global sales for March, including those from subsidiaries Daihatsu and Hino, fell 5.8 per cent year-on-year to 983,126 units, according to the company on Monday.

Despite the decline in sales, production remained strong, with worldwide output increasing 3.9 per cent to 1.02 million vehicles over the same period.

Despite stronger production figures last month, both Toyota and Nissan have already signalled potential output cuts ahead.

Toyota-brand vehicle production in Japan fell 3.3 per cent in March, reflecting early signs of pressure on the supply chain.

Suppliers are also preparing for a prolonged disruption that could last for months, even if the Strait of Hormuz reopens and normal shipping resumes.

Refineries may need significant time to restart operations, while shipping firms could face delays clearing a backlog of hundreds of vessels stuck in the Persian Gulf.

Major supplier Denso said in March that the ongoing conflict has already reduced Japan’s monthly vehicle output by around 20,000 units.

The figures also point to progress in Toyota’s push into all-electric vehicles, with sales more than doubling in March to 35,524 units.

Hybrid petrol-electric models also remained strong, rising 3.7 per cent to 442,544 units over the same period.

Even so, Toyota’s performance continues to stand out in an auto industry under pressure from tariffs, intensifying competition, and uncertainty around the pace of the global shift to electric vehicles.

While rivals have warned of billions of dollars in additional costs and are responding by raising prices or relocating production, Toyota has maintained its position as the world’s top carmaker in 2025, selling 11.3 million vehicles and further extending its lead over Volkswagen.