TOKYO, Japan: Toyota is weighing plans to build the next-generation RAV4 SUV in the United States, according to three people familiar with the matter, as the automaker adapts to new trade pressures and a surge in demand for its best-selling vehicle.
The company currently manufactures the RAV4 in Kentucky, Canada, and Japan. While the original plan was to continue exporting the updated model to the U.S. from Canada and Japan, sources say Toyota is now considering additional U.S. production, particularly in Kentucky, to limit exposure to President Donald Trump's 25 percent tariff on imported cars and to reduce vulnerability to currency fluctuations.
Toyota is expected to unveil the redesigned 2026 RAV4 later this year and gradually roll it out across global markets. The sources said a final decision on U.S. production has not yet been made. One noted that if Kentucky is selected, production would likely begin in 2027 due to the significant lead time required to retool facilities and reconfigure supply chains.
Despite the potential shift, Toyota's output in Canada is expected to remain steady.
In a statement to Reuters, the company said, "We continually study ways to improve our manufacturing operations to best serve customers and provide stable employment for team members. We have nothing to announce at this time and will not comment on speculation."
Toyota sold over 475,000 RAV4s in the U.S. in 2024, making it the top-selling vehicle in the country last year and surpassing Ford's long-dominant F-150 pickup truck. That figure represents roughly 20 percent of Toyota's total U.S. sales.
The company has 11 plants in the U.S., including auto-parts facilities, and manufactured nearly 1.3 million vehicles there in 2024—more than half of its total U.S. sales.
Toyota recently said it would avoid raising prices in response to the new tariffs and instead focus on lowering fixed costs.
Other Japanese automakers are also adjusting production plans. Nissan will reduce output of its top-selling U.S. model in Japan by 13,000 vehicles over the next quarter. Honda, meanwhile, will shift its next-gen Civic hybrid production from Mexico to Indiana.
After meeting with Japan's trade delegation this week, Trump said there had been "big progress" in tariff negotiations.
