Gasgoo Munich-When one of the world's largest automakers is forced to repeatedly throttle back production, the cause is rarely as simple as a sales dip.
On May 25, Toyota warned key suppliers that prolonged blockades in the Strait of Hormuz would force it to slash overseas output. The cut totals roughly 83,000 units through November. That marks a steep hike from an earlier plan to cut just 38,000 vehicles.
Toyota has already adjusted production multiple times in response to the logistics crisis in the Middle East. This latest move ranks among the single largest overseas production cuts since the pandemic began.
A waterway just 33 kilometers wide has become the ultimate stress test for global automakers' supply chain resilience.
Why a Single Strait Is Choking Toyota: The Fragility of a Deeply Entangled Supply Chain
The Strait of Hormuz handles roughly 20% of global oil trade and 20% of liquefied natural gas shipments, with nearly 20 million barrels flowing through daily.
Since U.S. and Israeli forces launched military strikes against Iran in late February, daily transits have plummeted from 138 vessels to fewer than 10. That has left a daily global supply shortfall of 16 million barrels — exceeding the combined total of the two 1970s oil crises.
Toyota is taking the first hit because its supply chain is deeply intertwined with the Middle East.
Image source: Toyota
Japanese automakers rely on the Middle East for 70% of automotive-grade aluminum and 65% of automotive naphtha, with nearly all of it moving through the Strait of Hormuz.
Toyota's reliance on Middle Eastern aluminum is even closer to 80%. A cutoff in aluminum body parts is hammering production of high-margin models like the Land Cruiser and Prado.
The Middle East is also a critical export market. In 2025, Toyota shipped over 320,000 vehicles from Japan to the region, accounting for roughly 16% of the country's total car exports.
This "double dependency" is a competitive advantage when the Strait of Hormuz flows freely. It involves sourcing raw materials from the Middle East while relying on the region to absorb finished exports. But when the waterway clogs, it becomes a double vulnerability.
More Volume, Less Profit: Toyota's Profit Warning and the Global Shockwave
Production cuts are just the tip of the iceberg; the worsening financials are far more alarming.
Toyota's fiscal 2025 revenue topped 50 trillion yen for the first time — a record for a Japanese company. Yet net profit fell 19.2% year-on-year, while operating profit plunged 21.5%, marking the second straight year of contraction.
The outlook for fiscal 2026 is even bleaker: Toyota forecasts net profit will slide another 22% to 3 trillion yen, signaling three consecutive years of decline.
Toyota conceded in its earnings report that rising material costs will shave 1.19 trillion yen off operating profit. Middle East-related factors will drag down results by 670 billion yen. This gap will be difficult to close in the short term.
The shockwave triggered by this geopolitical conflict is rippling through the entire automotive industry.
S&P Global Mobility estimates the crisis will cost the global market roughly 800,000 to 900,000 light-vehicle sales in 2026. The pain will extend into 2027, potentially creating a shortfall of up to 1.4 million units. Gulf states like Saudi Arabia and the UAE rely heavily on maritime imports. They face acute shortages and soaring logistics costs. Sales in the region are projected to drop by about 200,000 vehicles in 2026.
The pandemic taught automakers to manage demand uncertainty. The Strait of Hormuz crisis presents a new challenge. When "efficiency-first" supply chains collide with "security-first" geopolitical realities, even giants like Toyota cannot escape unscathed.
In that sense, Toyota's ordeal serves as a loud warning.
The Strait of Hormuz may eventually reopen. However, the structural vulnerabilities it exposed will not vanish. These include reliance on single transit points, concentrated sourcing of critical materials, and the geopolitical sensitivity of globalized division of labor.
For the broader auto industry, the legacy of this crisis is clear. When the physical choke points of global trade are squeezed, even the most powerful corporations are just small boats on a vast ocean.
