By Aug 7 (AfrikTimes) – Toyota Motor Corp. (7203.T) has cut its full-year operating profit forecast by 16% on Thursday, expecting a nearly $10 billion hit from U.S. tariffs on imported cars, higher material prices and a stronger yen.
The scale of the estimated tariff hit on the world’s top-selling automaker highlights mounting margin pressure across the industry, as global car makers face rising costs from U.S. import levies on vehicles, parts, steel and aluminum. “It’s honestly very difficult for us to predict what will happen regarding the market environment,” said Takanori Azuma, Toyota’s head of finance, during a briefing.
Despite the challenges posed by the tariffs, the Japanese automaker confirmed it would continue producing vehicles for U.S. customers.
Toyota has lowered its operating profit forecast for the financial year ending March 2026 to 3.2 trillion yen ($21.7 billion), down from an earlier projection of 3.8 trillion yen. The company now expects U.S. tariffs to reduce its profit by 1.4 trillion yen ($9.5 billion) for the entire year. Previously, Toyota had estimated a tariff-related hit of 180 billion yen for April and May, but it had not issued a full-year forecast until now.
Toyota Motor Corporation’s cars are seen at a briefing on the company’s strategies on battery EVs in Tokyo, Japan December 14, 2021.
For the first quarter, which ended in June, Toyota reported an operating profit of 1.17 trillion yen, down from 1.31 trillion yen a year earlier but still surpassing the 902 billion yen average estimate of seven analysts polled by LSEG.
Toyota’s North American business swung to an operating loss of 63.6 billion yen in the first quarter, from profit of 100.7 billion yen a year earlier, as it took a hit of 450 billion yen from the tariffs.
The first-quarter results highlight the pressure U.S. import tariffs are placing on Japanese automakers, even as a trade agreement between Tokyo and Washington offers potential relief. Under the bilateral deal, agreed last month, Japanese auto exports into the U.S. would face a 15% tariff, down from levies totalling 27.5% previously. But a timeframe for the change to go into effect has yet to be announced.
Last week, Toyota reported record global production and sales for the first half of the year, driven by strong demand in North America, Japan, and China.
In a separate announcement on Thursday, Toyota revealed plans to build a new vehicle manufacturing facility in Japan, despite declining car sales in the country due to a shrinking population and lower car ownership rates. Operations at the new plant are expected to commence early next decade, although production models have yet to be determined.
Following the earnings release, Toyota’s stock fell by 1.6%.
