Toyota made a fateful decision last fall as it neared an all-time U.S. sales record for its top-selling car.
The Japanese automaker decided to keep producing the 2025 Toyota RAV4 SUV well into the fourth quarter, delaying work to retool its factories to make the all-new 2026 model.
A year later, Toyota is reckoning with the consequences: North American production of the popular crossover has plunged 30% through September, according to consulting firm AutoForecast Solutions. And RAV4’s U.S. sales are
Toyota made a fateful decision last fall as it neared an all-time U.S. sales record for its top-selling car.
The Japanese automaker decided to keep producing the 2025 Toyota RAV4 SUV well into the fourth quarter, delaying work to retool its factories to make the all-new 2026 model.
A year later, Toyota is reckoning with the consequences: North American production of the popular crossover has plunged 30% through September, according to consulting firm AutoForecast Solutions. And RAV4’s U.S. sales are down 29% this year.
The RAV4 is America’s best-selling vehicle that isn’t a pickup truck, and the country’s most popular SUV, but that status is in danger. Toyota’s U.S. dealers have about four days’ worth of the crossover on their lots, the automaker said; industry data firm Motor Intelligence said the U.S. average was 51 days in September. RAV4 buyers have to order months ahead, and nearly every one that lands at a dealership is already spoken for.
“It has certainly put us in a little bit of a hole to dig out of,” Damon Rose, Toyota’s North America sales chief, told The Wall Street Journal in an interview. He defended the decision to prioritize production of the outgoing RAV4 last year, saying the 2025 vehicle remained “red hot” even as the newly updated one was right around the corner. “It almost defied logic,” he said.
Toyota produced few RAV4s in January and February after two plants in Ontario, Canada, underwent major retrofits for the overhauled 2026 model—sold for the first time only as a hybrid. Though that drop was planned, the automaker is still working to recover the deficit, Rose said.
Meanwhile, Toyota’s Kentucky plant got a late start on the new model after the automaker decided not to phase out the RAV4 from that plant, as it had previously planned.
The automaker’s factories have been running all-out to make up the shortage. A spokesman said Toyota has been producing more than 30,000 RAV4 units a month on average between the U.S. and Canadian factories since April, at the limits of their capacity. “We’re now getting that steady flow that we had promised the dealers,” Rose said.
The RAV4, introduced to the U.S. in 1996, has topped U.S. sales charts for years. The 2026 model is the first of the vehicle’s sixth generation, representing the kind of major change in design and components that happens about every five or six years. Last year, the automaker sold 479,288 of them, a record. It won’t hit that number this year.
“Normally, generational changeover issues aren’t this dramatic,” said Sam Fiorani, vice president at AutoForecast Solutions.
RAV4s are often spoken for on dealer lots before they arrive. Customers are sometimes withdrawing their deposits, dealers said, opting for a second-choice vehicle they can get sooner. Many dealerships don’t have a single new vehicle for visitors to test-drive.
At Longo Toyota near Los Angeles, the Japanese automaker’s biggest U.S. dealership, about 500 customers are waiting between six and eight weeks for RAV4s, said General Manager Doug Eroh. He said his wait list is now down from its peak, but it is still tough to get one.
Dan Rubin put down a $1,000 deposit on the bestselling SUV earlier this month. His Vancouver dealership told him he was number 48 on the wait list of RAV4 seekers, meaning delivery would be months away.
That was a tough sell for a buyer currently driving a 2014 Mazda with about 130,000 miles that was in desperate need of repairs. This week he withdrew his deposit, opting instead for a Toyota Sienna minivan that he could get sooner.
The shortage hits Toyota at an inopportune time. The automaker has been poised to overtake General Motors in U.S. sales. That milestone may be tough to reach without a plentiful supply of its top-selling vehicle. Meanwhile, Americans burned by persistently high gas prices are flocking to hybrid cars—and some have been turning to RAV4 competitors such as the Honda CR-V Hybrid.
This year marks the first time Toyota has offered the SUV in only hybrid and plug-in hybrid variants. The automaker bet big on hybrids as much of the U.S. industry attempted a pivot to EVs, which so far has paid off for the Japanese giant.
The SUV’s hybrid setup is another reason demand has skyrocketed, as gas prices have risen this year. Nearly all RAV4s achieve more than 40 combined miles a gallon. Toyota didn’t foresee the rise in U.S. gas prices, Rose said, and that has broadened the RAV4’s appeal beyond hybrids’ coastal strongholds.
“Tulsa, Oklahoma, wasn’t begging for hybrids. Now, the whole country sees the value,” Rose said.
Normally, automakers build buffer stocks of outgoing vehicles to buy time when factories have to be reworked for a new model. But the traditional strategy is harder for Toyota because its vehicles sell at a faster rate, said Tyson Jominy, a senior vice president at research firm JD Power.
Last time around, the company handled it differently. In 2019, Toyota grew RAV4 sales in the U.S. even after transitioning to the vehicle’s fifth generation. A Toyota spokesman said the automaker had more inventory of the 2018 RAV4s on hand at the time, allowing more breathing room and an earlier transition.
Caitlin Giles, a medical assistant in New Jersey, put down a deposit for a RAV4 in early May. Her three-week wait turned into three months. When the dealer finally called, Giles rushed home from work and woke up her son.
“You need to take me to the dealership right now,” she recalls telling him. “I need that car.”
Write to Christopher Otts at christopher.otts@wsj.com and Owen Tucker-Smith at Owen.Tucker-Smith@wsj.com
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