Toyota is nipping at the heels of U.S. sales leader GM. Here's why

There's a lot to celebrate at Toyota Motor North America these days.

At the midway point of 2026, amid a market wracked with uncertainty about tariffs, trade, war in the Middle East and general affordability issues, many automakers reported sales losses.

But Toyota's sales crept up amid the chaos, even with supply constraints of its most popular vehicle, the RAV4, while the company transitions to the vehicle's sixth generation.

Higher sales for Toyota bring the automaker closer to rival General Motors, which has seen sales slip, at a level not seen since 2021, when Toyota became the No. 1 vehicle seller in the United States for the first time ever. Back then, inventory issues from the semiconductor shortage hampered GM's sales.

But this year, industry experts point to the differences in the vehicle portfolios that both automakers currently offer for clues as to what brings these two giants so close in the race.

For Toyota, it says the secret to its success is quite simple: It builds vehicles customers want to buy.

At the midyear point, the Japanese automaker sold 1,243,391 vehicles, a 0.5% bump from the first six months of 2025.

GM still outsold Toyota with 1,341,325 vehicle sales, but that is a 6.8% decline in the same period, with the company citing a smaller electric vehicle market, inventory constraints and the loss of discontinued vehicles in its portfolio as factors that negatively impacted sales.

Offering a diverse array of vehicle products gives customers choices, which, in part, is helping grow the company's market share, said David Christ, group vice president and general manager of Toyota Division of Toyota Motor North America, who is responsible for the company's mass-market brands' sales, marketing and market representation.

"Our dealers are selling in advance of the cars arriving. The consumers are waiting for the cars and then coming in to get the cars," Christ told the Detroit Free Press, part of the USA TODAY Network. "Business is strong, demand is high, and we're just enjoying the ride."

Just how well is it going for Toyota?

Though the automaker was criticized for its slow rollout of electric vehicles, Toyota now offers more options than any automaker when it comes to propulsion diversity, according to analysts at Cox Automotive. Hybrid vehicles, in particular, are having a moment, especially with soaring gas prices related to the Iran war beginning to have an effect on consumer purchases.

Charlie Chesbrough, Cox Automotive senior economist, said a focus on profitable gasoline-powered pickup trucks and all-electric options at the cost of plug-in hybrids and traditional hybrids may have painted the Detroit Three into a corner.

"The fact that we're so focused here in the U.S. market on these big pickup trucks ― and there's no other market in the world for these things ― means we're a little myopic," he said. "We don't see the whole world, we're really consumed by these giant, really profitable products. But there's only so much growth ... you're not going to sell 15 million of these things."

Toyota has struck a remarkable balance between the vehicle inventory available at dealerships and the customers waiting for them, according to Ivan Drury, director of insights at Edmunds. Wait lists for the recently redesigned 2026 RAV4 hybrid ― America's best-selling five-passenger SUV ― far surpass the company's capacity to produce the vehicles in Canada and Japan.

Toyota last month added production in Georgetown, Kentucky, where the Camry also is assembled, which is expected to produce about 40,000 RAV4s by the end of this year.

Capturing exactly what consumers want out of a vehicle and sending inventory to dealerships at a cadence that directly aligns with customer demand is something Toyota has done to a freakish degree with the RAV4, Drury said.

"They're so in tune not just with what the customer wants but the inventory dealers can have without resorting to incentives," he said. "Nobody is going to catch up to Toyota when it comes to hybrids. They are the Kleenex of hybrids ― people default to Toyota when it comes to hybrids."

In June, Toyota dealers had the third-lowest inventory recorded in the company's recent history. That amount was about 2,000 more vehicles than the second-lowest inventory month, which was in May of this year. The lowest month? Last August, according to Christ.

While the Detroit Three automakers eliminated small cars from their lineups in recent years and have written off billions from investments in electric vehicle production, Toyota has leaned in.

Rather than focus on adherence to a particular policy or initiative, the company said its business strategy comes directly from the consumer itself.

"We really don't spend a lot of time on what other (automakers) are doing or planning. We set our plan and follow the plan," Christ said. "We have always felt that customer choice is really important, whether that be in the lineup ― passenger car to big auto and framed pickup truck ― or in the powertrains ― from internal combustion engine all the way up to battery electric vehicles.

"We let the customer pick what powertrains are best for them, we let the customer pick what body types are best for them."

Shawn Domeracki, vice president of Lexus sales and dealer development, noted similar trends for the company's luxury arm. Lexus had a record June sales month with over 29,000 vehicles, the most the brand sold in one month since 2007. Year to date, Lexus sold just under 169,000, the second-best start to the year since last year.

"Some of our success is just offering choice in the marketplace," Domeracki said. "Certainly, we have that on the luxury side, and the Toyota side has even more of that choice available from an affordable standpoint."

Gaining on GM

Though the two highest-volume carmakers in the United States both have broad portfolios, their customer base differs in many ways.

Drury noted that while GM and Toyota together cover most of the new-vehicle market, neither of them offers vehicles that appeal to absolutely everyone.

Drury characterizes that average Toyota customer as the type of person looking to extract the maximum utility out of their vehicle purchase. GM customers may be more attracted to vehicle styling or advanced propulsion systems, he said.

"But oddly enough, there's enough of each consumer base to sustain pretty high levels," he said. "They're not catering to the same people. They may have some in the middle, but at the extremes, there's no overlap."

But each lineup is missing something crucial, Drury said: Toyota does not offer the level of truck that GM has. And GM does not have any hybrids or sedans.

Where inventory management comes into play

While setting specific sales goals might drive Toyota's competitors, Domeracki said it makes more sense for the Japanese automaker to chase the market in terms of percentages. To ensure Toyota and Lexus dealerships maintain disciplined inventory management ― meaning vehicles are available when customers want to buy them but aren't languishing on lots to drive up costs ― it starts with a pragmatic approach to anticipating the market.

Toyota expected the size of the new market in 2026 to be about 15.8 million vehicles, similar to what analysts at Cox Automotive and Edmunds forecast, with Lexus taking up between 2.2% or 2.3% of the overall industry.

Publicly predicting a specific figure risks projecting a sales number that could be too high, or too low if the market suddenly grows to 17 million vehicles, he said.

"We always plan conservatively on that," Domeracki said. "When we plan towards that versus a raw volume target, it allows us to be in a much better position as we move forward rather than some of the competitors on our side that consistently talk about ‘We're going to 400,000 or 410,000.' I mean, that's really meaningless if the market is not there."

But while the rate at which Americans purchase vehicles in a given year is out of the automakers' control, what falls squarely in their control are the vehicles they plan to sell.

"What ultimately has put us in a great position ... our product portfolio being probably the strongest it's been in the almost 30 years I've been with the company," he said. "It has put us in a position where when you can turn it well and customers are waiting for products ― it certainly makes us all look a lot smarter."

Only time will tell how much higher Toyota's sales may climb with its current lineup. For Drury, Toyota would need to offer more options at the higher end of the market and offer full-duty trucks to truly take the crown on U.S. vehicle sales. But Toyota's current sales success is undeniably part of a broader strategy, years in the making, that's paying off, according to Drury.

"Toyota, they've got their ear to the ground. They think like the customer: ‘What do you want now and for the next 10 years?' They're not as influenced by what else is going on," Drury said. "Chasing policy is crazy. That stuff changes with every single election. You have to factor it in, but at the end of the day, you listen to the consumer, and you'll find yourself at a steady pace."

Jackie Charniga covers General Motors for the Free Press. Reach her at jcharniga@freepress.com.

This article originally appeared on Detroit Free Press: Toyota is nipping at the heels of U.S. sales leader GM. Here's why

Reporting by Jackie Charniga, Detroit Free Press / Detroit Free Press

USA TODAY Network via Reuters Connect

Copyright Reuters or USA Today Network via Reuters Connect

This story was originally published July 11, 2026 at 7:30 AM.