Toyota Forecasts 21% Profit Drop Amid Tariffs and Costs

Published 2 hours agoTM

Toyota Forecasts 21% Profit Drop Amid Tariffs and Costs

Toyota Motor Corporation has announced a projected 21% decline in operating profit for the fiscal year ending March 2026. The company expects profits to fall to ¥3.8 trillion ($26 billion), down from the previous year's ¥4.8 trillion. This announcement comes as the company faces multiple economic pressures affecting its bottom line.

Several factors have contributed to Toyota's anticipated downturn. Notably, the 25% tariffs imposed by the United States on imported vehicles and auto parts are expected to significantly impact profits. Additionally, rising material costs for essential raw materials like steel and aluminum are increasing production expenses, said Reuters. Currency fluctuations, particularly a stronger yen, have also adversely affected the value of Toyota's overseas earnings when converted back to Japanese currency. Lastly, higher vehicle prices due to these increased costs may dampen consumer demand, adding further pressure on the company's profitability.

In response to these challenges, Toyota is exploring strategic moves, including a potential $42 billion buyout of its subsidiary, Toyota Industries, cited as one of the world's largest buyouts by the Financial Times. To counteract some of the pressures from tariffs and currency issues, the company is considering relocating production of its RAV4 SUV to the U.S. Amid these developments, Toyota continues to focus on the robust demand for its hybrid vehicles to buffer some of these financial impacts.

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