Toyota sales fall as Iran conflict strains Japanese auto supply chains

Yesterday 15:20

By: Dakir Madiha

Toyota sales fall as Iran conflict strains Japanese auto supply chains

Toyota Motor reported a 2.3% decline in global sales for February, releasing the figures Monday as Japanese automakers face mounting supply chain disruptions stemming from the Middle East conflict, now entering its fifth week. Total sales, including subsidiaries Daihatsu Motor and Hino Motors, fell to 806,905 units, weighed down by fierce electric vehicle competition in China and weak domestic demand.

The February figures do not yet capture the impact of the U.S.-Israeli conflict with Iran, which began on the final day of the month. However, the war is already reshaping how Japan's auto industry operates, and an escalation over the weekend threatens to deepen the strain.

On Saturday, Iran's Islamic Revolutionary Guard Corps launched coordinated missile and drone strikes against two of the world's largest aluminum producers: Emirates Global Aluminium in Abu Dhabi and Aluminium Bahrain, according to the BBC. EGA reported that its Al Taweelah facility sustained significant damage, with several employees injured. Aluminium Bahrain recorded two injured workers in a separate attack.

The strikes compounded an already fragile supply situation. Aluminium Bahrain had declared force majeure on shipments earlier in March, while Qatari smelter Qatalum had begun halting production. Japanese aluminum buyers agreed to pay premiums of $350 to $353 per metric ton for second-quarter deliveries, the highest in 11 years and roughly 80% above the previous quarter's level, according to Reuters.

Japanese automakers source approximately 70% of their processed aluminum and naphtha from the Middle East, according to Automotive Manufacturing Solutions. Toyota and Nissan Motor both announced production cuts for March, while Honda Motor plans to offset export declines by ramping up local output in the Americas, Japan, and Thailand, according to NHK.

The Japan Automobile Manufacturers Association said the conflict is affecting deliveries and noted that domestic manufacturers exported around 800,000 vehicles to the Middle East in 2025, valued at approximately 2,500 billion yen, or $15.6 billion. Rerouting shipments around the blocked Strait of Hormuz via the Cape of Good Hope would nearly double delivery times to around 100 days, the organization said.

Toyota's February data showed a 13.9% drop in China sales as local electric vehicle makers continue to erode market share, while production there fell 11.5%, partly due to the Lunar New Year calendar. Honda's global sales declined 6.6% to 249,414 units, including a 15.2% drop in China, while Nissan posted a 7.4% decline with a sharper 19.4% fall in that market.

Facing tightening supply, some Japanese auto parts suppliers have opened negotiations with Russia's Rusal to purchase aluminum alloys, a move many had avoided since Moscow's invasion of Ukraine, The Business Times reported. One trader said that while buying from Russia was not the preferred option, there may be no alternative. Toyota CEO Koji Sato acknowledged that Japanese automakers are reassessing their supply chains given their dependence on Gulf aluminum.