Toyota forecasts 10 million-vehicle production in 2026 on hybrid demand

Toyota Motor Corp. is preparing for a sharp rebound in production, telling parts suppliers it expects global vehicle output to exceed 10 million units in 2026, driven largely by strong demand for hybrid cars in the United States, Reuters reported Saturday, citing sources.

The forecast comes as the world’s largest automaker closes in on that milestone this year. Toyota’s global output in the first 11 months of 2025 rose 4.9% year on year to 9.18 million vehicles, and suppliers expect full-year production to total around 10 million units. A Toyota spokesperson declined to confirm specific production targets for 2026 but said the company is sharing estimates with suppliers to help them plan capacity.

The outlook signals confidence in Toyota’s hybrid-heavy strategy at a time when global automakers are grappling with uneven demand, shifting regulations, and rising trade risks. In the US, hybrids have emerged as a bright spot as consumers seek fuel efficiency without the higher costs and charging concerns associated with fully electric vehicles.

Production pressure

Toyota’s optimism on output contrasts with its more recent monthly performance. In November, the automaker reported a 1.9% drop in global sales to 965,919 units and a 3.4% decline in production to 934,001 vehicles, weighed down largely by China. Toyota and Lexus sales in China fell 12% after trade-in subsidies for electric and fuel-efficient vehicles were phased out in major cities as funding ran dry.

The China slowdown has been compounded by rising diplomatic tensions between Beijing and Tokyo, including travel warnings issued by China following comments by Japan’s prime minister on Taiwan. The weakness highlights how regional policy shifts can quickly offset gains elsewhere, even for globally diversified manufacturers like Toyota.

Trade tensions

Elsewhere, regulatory developments are reshaping the competitive landscape. The European Union’s recent decision to soften its planned ban on combustion engines offers legacy automakers more flexibility, but it may also open the door for Chinese electric vehicle makers to expand their presence. Toyota, which pioneered gas-electric hybrids, has an advantage over rivals more reliant on traditional gasoline engines, though competition remains intense.

In the US, Toyota is also navigating political pressure over trade. President Donald Trump has signaled plans for steep tariffs on imported vehicles and parts, while urging more domestic production. In response, Toyota recently said it would ship three US-built models back to Japan, a symbolic move aimed at easing trade frictions.

Despite short-term headwinds, Toyota’s suppliers see the company’s 2026 production outlook as a sign that demand, particularly for hybrids, remains resilient. For an industry facing uncertainty on multiple fronts, Toyota’s push past 10 million vehicles would reaffirm its role as a bellwether for the global auto market.

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Andrew Martin

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