Toyota’s RAV4 has become one of the defining vehicles of the modern American market, to the point that the company finds itself in an unusual position. Demand is so strong that Toyota is encouraging dealers to steer shoppers toward less popular models, not because interest is waning, but because supply can’t keep up.
The pressure is on as Toyota transitions to multiple plants for the next-generation RAV4. The redesigned RAV4 was revealed in 2025, and changes requiring the next generation to be built at multiple plants in Kentucky, Ontario, and Japan are expected to disrupt early availability. Even before that change, the RAV4 was already operating near Toyota’s production capacity ceiling.
Simply put, Toyota is facing a textbook problem of supply outstripping demand. The response is not to cool the market but to rebalance the showroom.
Toyota Motor North America executive David Christ gave a clear message at a meeting held during the National Automobile Dealers Association event in Las Vegas. If RAV4 inventory remains tight, dealers will have to make up part of that shortfall by selling other vehicles in Toyota’s lineup.
Toyota and Lexus have been operating with relatively lean inventories, and the situation shows no signs of normalizing anytime soon. Christ noted that the bulk of Toyota’s available stock is focused on pickup trucks, giving the brand more breathing room in that part of the portfolio. Passenger cars and crossovers, however, remain a more uncertain picture that will depend on how the year develops.
This type of disruption has real-world implications at the dealership level. When a high-demand model becomes scarce, pricing pressure often shifts from manufacturer strategy to retailer behavior.
Limited availability has already produced some uncomfortable side effects. Some dealers have reportedly added markups to the new RAV4, in some cases several thousand dollars above the manufacturer’s suggested price.
That approach risks undermining the reputation the RAV4 has built over the years. Part of the model’s appeal has always been its reasonable value proposition: strong resale value, proven reliability, and a practical package that makes sense for a wide range of households. When buyers see a mainstream compact SUV priced like a premium product, it can damage trust and drive buyers to competitors.
Toyota does not directly control each dealer’s pricing decisions, but the long-term strength of the brand depends on keeping key models in line with their image in the market.
