Investing.com -- Japanese automakers increased sales by 2% year-over-year in July 2026, while total US vehicle sales declined 2% during the same period, according to Morgan Stanley data released on Sunday.

The July 2026 seasonally adjusted annual rate reached 16.5 million units, down 1% year-over-year and 1% month-over-month. The figure exceeded the consensus estimate of 16.3 million units by 1%.

Honda posted the strongest performance among major Japanese manufacturers with sales rising 13% year-over-year. The growth came from affordable internal combustion engine models, with the Accord, CR-V, and Civic all recording gains.

Toyota sales fell 1% year-over-year as RAV4 sales dropped 21% during the transition to a new model. Hybrid electric vehicle RAV4 sales increased approximately 75% year-over-year, but internal combustion engine sales declined as the outgoing model was discontinued. The hybrid-only Camry and higher Corolla sales provided support.

Nissan overall sales increased 2% year-over-year. Lower Versa and Sentra sales were offset by stronger sales for the Rogue model. Incentives on the Rogue remained at around $5,400 per vehicle.

Subaru sales rose 1% year-over-year, with Forester sales continuing to increase following a retail price reduction in February 2026. Outback and Crosstrek sales declined year-over-year despite the launch of a new Outback model.

Mazda sales declined 13% year-over-year, with CX-5 sales falling 22% year-over-year showing no clear benefit from the model changeover.

Industry average incentives declined to $3,194 per vehicle in July, down 8% month-over-month. Japanese automaker incentives fell more sharply to $2,258, down 14% month-over-month. Toyota's incentive dropped to $1,328, supported by hybrid electric vehicle demand.

Industry inventory days increased to 50 days at the end of July from 49 at the end of June, while the Japanese automaker average declined to 34 days from 35. Toyota remained at 23 days, below the industry average.

Hybrid electric vehicle sales reached 217,000 units in July, up 26% year-over-year. Electric vehicle sales fell to 77,000 units, down 42% year-over-year. California is set to introduce a $3,500 subsidy for first-time electric vehicle buyers purchasing new vehicles priced below $50,000.