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Toyota Boosts Annual Profit Forecast as Strong Global Sales Drive Growth Despite Tariffs

Prime Highlights:

  • Toyota raised its annual operating profit forecast to 4 trillion yen, up 200 billion yen from the previous estimate, despite challenges from U.S. tariffs.
  • Global demand remains strong, with vehicle sales, including Lexus, reaching 5.3 million units, a 4.7% increase from last year.

Key Facts:

  • Quarterly operating profit fell to 834 billion yen, down nearly 28% year-on-year, while revenue increased over 8% to 38 trillion yen.
  • Electrified vehicles, including hybrids, now account for nearly 47% of Toyota’s total sales, highlighting the company’s focus on greener mobility.

Background:

Toyota has raised its operating profit forecast for the year ending March 2026 to 3.4 trillion yen, up 200 billion yen from its earlier estimate, despite challenges from U.S. tariffs.

The company reported that operating income for the September quarter fell to 834 billion yen, slightly below analyst expectations of 863.1 billion yen, reflecting a nearly 28% year-on-year decline. Revenue, however, rose over 8% to 12.38 trillion yen, showing strong global demand for Toyota vehicles. Net income for the quarter reached 972.9 billion yen.

“Despite the impact of U.S. tariffs, robust demand for our products, particularly in Japan and North America, has supported increased sales volumes and strengthened value chain profits,” Toyota said in its earnings report.

The recent decline in operating profit marks the second consecutive quarter affected by tariffs, which were introduced as reciprocal measures in April. A trade agreement in July reduced tariffs on Japanese vehicle exports to the U.S. to 15% from the initially proposed 25%, effective August 7.

Toyota noted that tariffs remain the largest drag on U.S. profits, while currency fluctuations and rising costs affected earnings in Japan. Toyota is considering shipping vehicles made in the U.S. to Japanese customers, although company executives say this may not be the most cost-effective option.

In the nine months to September, Toyota and its Lexus brand sold 5.3 million vehicles, up 4.7% from last year. The company is focusing on increasing sales and managing costs, with nearly 47% of sales coming from electrified vehicles, including hybrids.

Experts say Toyota’s profits could improve next year if trade costs stabilize and the yen weakens, but competition in the fully electric vehicle market, especially from Chinese companies, is expected to remain strong.