Toyota Motor lifted its full-year operating income forecast 6.3% despite facing the largest tariff-related profit hit disclosed by any automaker, demonstrating resilience as vehicle demand remains firm in key markets.
The Japanese manufacturer now projects operating income of ¥3.4 trillion ($23.3 billion) for the fiscal year ending March 2026, up from a previous estimate of ¥3.2 trillion ($21.9 billion), according to financial results released Wednesday. The revision comes even as US tariffs imposed earlier this year are expected to reduce annual profit by ¥1.45 trillion ($9.9 billion), representing the sector’s steepest trade-related cost burden.
Consolidated vehicle sales reached 4.78 million units in the six months through September, a 5% increase year-over-year, with growth concentrated in Japan and North America offsetting weakness in Europe. The ratio of electrified vehicles climbed to 46.9% from 44.4% a year earlier, driven by hybrid demand in North America and China rather than battery-electric models.
Second-quarter operating income fell to ¥839.5 billion ($5.7 billion) from ¥1.16 trillion a year earlier, missing analyst expectations as tariff costs accelerated. The company absorbed ¥450 billion in trade duties during the July-September period alone, squeezing margins to 6.8% from 10.1%.
The tariff impact stems from 25% US import duties on vehicles and parts that took effect in stages starting April and May. Toyota’s exposure spans not only direct Japanese exports but also cross-border shipments within North America from Canadian and Mexican facilities, compounding the financial drag.
Management cited improvement efforts including cost reductions of ¥275 billion, favorable volume and model mix contributing ¥320 billion, and expanded value chain profits of ¥195 billion as partial offsets to trade headwinds. The company declined to increase vehicle prices, citing competitive pressure and customer loyalty concerns.
Toyota raised its interim dividend ¥5 to ¥45 per share and maintained its full-year payout forecast at ¥95, continuing a policy of stable dividend growth. The company did not announce new share repurchase plans following a ¥3.2 trillion authorization in June.
The automaker acknowledged that its break-even volume has increased significantly in recent years due to tariff impacts and expanded investments in human resources and technology, requiring productivity improvements to restore profitability resilience.
