Under the heavy pressure of a 25% automobile tariff, Toyota Motor Corp. Sponsored ADR (TM.US) is considering producing the new RAV4 in the United States.

According to sources familiar with the matter, Toyota Motor Corp. Sponsored ADR (TM.US) is considering producing the next generation of its best-selling RAV4 SUV in the United States, becoming the latest automaker to consider adjusting its supply chain to mitigate the impact of US automotive tariffs. Toyota currently produces this popular SUV in Kentucky, Canada, and Japan. Sources revealed that Toyota initially planned to export the new RAV4 from Canada and Japan to the United States, but is now also considering production in Kentucky as demand for the vehicle may exceed supply. Increasing supply from the United States would also reduce the impact of the 25% car tariff imposed by US President Donald Trump on Japanese automakers and avoid potential cost increases due to fluctuations in the yen, sources said. Sources stated that Toyota is set to launch a redesigned 2026 model of the RAV4 later this year and will gradually introduce it to different markets worldwide. The company has not disclosed a specific timeline for the US market. Sources mentioned that Toyota has not finalized its production plans. One source stated that any production adjustments cannot be implemented quickly and require long-term planning as upgrading production facilities and adjusting the supply chain would consume significant time and resources. If Toyota proceeds with its production plans in Kentucky, sources said the new RAV4 would start production in the US by 2027. Regardless of the outcome in Kentucky, sources mentioned that Toyota's overall automobile production in Canada may remain unchanged. In a statement to the media, Toyota said the company is continually studying ways to improve manufacturing processes to provide the best service for customers and offer stable employment opportunities for employees. When asked about plans to produce the new RAV4 in Kentucky, the company stated, "We have nothing to announce at this time and will not comment on speculation." According to data from market research company JATO DYNAM JAPANics, the RAV4 was the best-selling car in the US last year, displacing the long-standing leader, the Ford F-150 pickup truck. Toyota sold over 475,000 RAV4s in the US last year, accounting for one-fifth of its total vehicle sales in the country. It is currently unclear how many new RAV4s this automaker will produce in the US. They have 11 factories in the US, including automotive parts plants, producing almost 1.3 million vehicles in 2024, accounting for over half of their total US sales of 2.3 million vehicles. Toyota stated this month that it will continue operating as usual, focusing on reducing fixed costs and avoiding more drastic measures such as increasing car prices to address tariffs. Trump stated on Monday that he is considering modifying car tariffs as manufacturers "need a little time." Tokyo's trade negotiators met with Trump and US officials on Wednesday in Washington to discuss tariff issues. Trump later stated that the negotiations had made "tremendous progress."