The Reuters Tankan business confidence index for January 2026 showed a slide in sentiment among Japanese manufacturers — including automotive firms — to a six-month low, although still in positive territory. Companies reported weaker demand from China and subdued consumer spending in major markets such as the U.S. as key headwinds facing the sector.

Automakers also cited tariff-related export challenges and broader global economic uncertainty as contributors to the decline in confidence. Despite this, some firms expect sentiment to rebound by spring as trade patterns stabilise and hybrid/higher-value vehicle demand remains strong.