Toyota Australia commits to diesel for regional buyers as sales slide and NVES pressure builds

Pappas: diesel remains part of the heartland

Toyota Australia has moved to reassure buyers that diesel is not going anywhere, despite a sharp slump in diesel sales nationally. Speaking to CarExpert, sales vice-president John Pappas said the company does not want to leave customers behind, and that "customers still need diesel in regional and rural Australia". "It's a very big part and heartland of our country, so we do not want to leave them behind," Mr Pappas told CarExpert, pointing to diesel models' continued presence among the top-selling vehicles in the latest VFACTS figures. ¹

According to CarExpert, Toyota says many regional customers use their vehicles as tools of trade or for long distances, towing and off-tarmac environments. Mr Pappas noted that across the combined HiLux and LandCruiser family, nearly 54 per cent of vehicles are purchased and used by customers outside the major metropolitan cities, customers for whom a battery-electric vehicle might not be appropriate. Toyota Australia says it will continue to support those rural and regional customers who rely on diesel vehicles for transport or work. ¹

Diesel sales slumping as electrified models climb

The comments come against a shifting market backdrop. CarExpert reports that sales of diesel-powered vehicles slumped 25.5 per cent year-on-year to the end of September 2026, while conventional hybrid sales rose 11.4 per cent. Diesel's market share has fallen from around 33 per cent in 2025 to 24.3 per cent in 2026, with record pump prices for both diesel and petrol among the contributing factors. ¹

The sales charts reflect the shift. CarExpert, citing VFACTS data, reports the Ford Ranger still leads the year-to-date charts despite sales falling 10.0 per cent to 37,858, while HiLux is second with 36,616 sales, down 10.3 per cent from 40,813 at the same point in 2025. In September alone, EV sales soared 117.7 per cent year-on-year and plug-in hybrid sales rose 122.7 per cent, with the Tesla Model Y and Toyota RAV4 hybrid interrupting the utes' usual dominance of the top of the charts. ¹

Even diesel-only stalwarts are seeing softer demand. CarExpert reports the diesel-only Toyota LandCruiser Prado and Isuzu D-Max placed ninth and tenth respectively in September, but their year-to-date sales are down 28.3 per cent and 12.0 per cent respectively. Toyota's own bZ4X recorded one of its best months with 410 sales across SUV and Touring versions in September. ¹

NVES pressure and the call for a fairer LCV target

Toyota's diesel defence is intertwined with its lobbying on the New Vehicle Efficiency Standard. CarExpert reports Toyota Australia is lobbying the federal government for changes it says could unfairly push up prices for popular diesel models including the HiLux and LandCruiser 70 Series light commercial vehicles. Compliance with the NVES has been enforced since 1 July 2025, with a review of the scheme required to commence before the end of 2026 and current targets set through to 2029. ²

Mr Pappas told CarExpert the big challenge comes from 2027 for light commercial vehicles, arguing that tough targets risk leaving customers behind. "We'll be consulting government to be able to really look at a more pragmatic, realistic light commercial vehicle target under NVES that is more equitable to the Australian market," he said, while stressing Toyota remains supportive of an ambitious but pragmatic standard. Yahoo News reports Mr Pappas also said Toyota "cannot rule out price increases" due to the challenging NVES targets for commercial vehicles from 2027 onwards. ²³

Yahoo News notes that a HiLux SR5 diesel earned Toyota emissions credits when the scheme began in 2025, but as targets tighten, Drive has estimated the same vehicle will attract a penalty of about $500 this year, rising to roughly $2,000 in 2027. The NVES has already contributed to price increases for models including the Ranger and Ford Mustang, and CarExpert reports Mazda, Isuzu and Ram have also warned of higher prices under the scheme. ²³

Mr Pappas also told Yahoo News that rural and regional buyers face particular difficulty switching to electric vehicles because of charging infrastructure and long driving distances, arguing EV growth is not reflected in those markets. CarExpert adds that Mr Pappas pointed to Toyota's more than 20 years of hybrid and battery-electric technology since the first Prius as evidence the brand supports decarbonisation, while seeking balance between demand and regulation. ³²

Renewable fuels as a diesel pathway

Toyota has also been working to extend the life of its diesel fleet through low-carbon liquid fuels. Unsealed 4X4 reports Toyota has confirmed that HiLux models built from mid-2015 onwards with its 1GD or 2GD turbo-diesel engines are compatible with HVO100, a hydrotreated vegetable oil fuel made from renewable feedstocks including vegetable oil and recycled cooking oil, covering N80 and N90-generation models of which more than half a million are on Australian roads. ⁴

As part of the confirmation, an HVO100-powered HiLux completed an approximately 3,000km journey through regional Queensland, New South Wales, Victoria and South Australia in conjunction with the National Bush Summit. Unsealed 4X4 reports Toyota says all of its existing diesel vehicles can already operate on a 20 per cent low-carbon liquid fuel blend, and it is studying HVO100 compatibility for additional diesel models, though it has not announced which vehicles will be next. ⁴

Toyota Australia CEO and President Matthew Callachor told Unsealed 4X4 that decarbonisation requires a multi-pathway approach, and that the HVO100 confirmation is "validation that the vehicle technology exists today". Availability remains the sticking point: Unsealed 4X4 notes Toyota supports development of a domestic low-carbon liquid fuels industry, pointing to the Brisbane Renewable Fuels project being explored by Ampol, GrainCorp and IFM Investors. ⁴

A changed tone from Toyota, and the road ahead

The company's position has evolved in recent years. CarExpert notes Mr Pappas' predecessor, Sean Hanley, told the publication in 2025 that diesel could fade out in around a decade, saying he could not imagine diesel being "a fuel of the future" because a petrol vehicle can do everything it can do plus some. Mr Hanley also said he believed hydrogen could take over from diesel sometime in the 2030s. ¹

Toyota's electrification push continues regardless. CarExpert reports Toyota Australia introduced a battery-electric HiLux in May 2026 and has confirmed plans to introduce a hydrogen fuel-cell HiLux locally in 2028. The latest comments nonetheless make clear the brand intends to keep diesel in its lineup for customers whose needs those alternatives do not yet meet, particularly in regional and rural Australia. ¹