Toyota Motor Corporation (TM.US), the world's largest automaker, cut its earnings forecast for the fiscal year ending March 2026, citing the combined impact of higher U.S. tariffs on vehicles and parts, as well as a stronger yen.
The company now expects full-year net profit to fall 44% year-on-year to ¥2.66 trillion, compared with the previously projected 35% decline to ¥3.1 trillion. Operating profit is forecast at ¥3.2 trillion, down from the earlier estimate of ¥3.8 trillion, representing a 33% decrease. Revenue guidance remains unchanged at ¥48.5 trillion.
Toyota estimates that U.S. tariffs will reduce its full-year operating profit by approximately ¥1.4 trillion (about US$9.5 billion), including around ¥1 trillion in losses from its vehicle business and ¥400 billion from parts and supply chain support. In the first quarter alone, tariffs caused a ¥450 billion hit. The appreciation of the yen is also expected to cut full-year profit by roughly ¥725 billion.
This is Toyota's first full-year assessment of the tariff impact, following an earlier estimate of ¥180 billion in losses for April and May. Following the earnings release, Toyota's shares in Tokyo fell as much as 2.4% before paring losses to close down about 1.1%.
Despite the headwinds, strong demand for hybrid models in key markets supported record global sales in the first half of 2025 (January–June), reaching 5.5 million units, up 7.4% from a year earlier. The company expects full-year group sales to hit 11.2 million vehicles.
Toyota also announced plans to build a new manufacturing plant in Aichi Prefecture, Japan, scheduled to start operations in the early 2030s, aiming to maintain annual domestic production at around 3 million units.
The tariff issue is affecting other automakers as well. Ford Motor Co. expects a net impact of US$2 billion, up from its previous estimate of US$1.5 billion. Stellantis NV forecasts a hit of around €1.5 billion, while General Motors Co. has a tariff exposure of between US$4 billion and US$5 billion. Among Japanese automakers, Subaru Corp. expects a ¥210 billion impact, Nissan Motor Co. ¥300 billion, and Honda Motor Co. ¥450 billion- all below Toyota's ¥1.4 trillion.
Under a trade agreement reached between Japan and the U.S. last month, Japanese vehicle exports to the U.S. are now subject to a 15% tariff, alongside a Japanese investment plan in the U.S. totaling approximately US$550 billion. While the rate is lower than the 25% level previously expected by the industry, detailed implementation rules have yet to be clarified. U.S. President Donald Trump also said Japan would accept imports of
Ford's F-150 pickup trucks, highlighting differences in the interpretation of certain terms of the deal.
Toyota CFO Yoichi Miyazaki said the company will continue to improve production efficiency, strengthen cost controls, and maintain ample liquidity to navigate policy uncertainties. He added that Toyota will closely monitor changes in the trade environment and hopes for further tariff reductions to support stable economic ties between Japan and the U.S.
