Based on September interim report from each year. (Graphic by Sankei/JAPAN Forward)
On November 5, Toyota Motor Corporation raised its full-year forecast for consolidated operating profits — a key measure of core earnings — for the fiscal year ending March 2026.
The company now expects ¥3.4 trillion JPY ($22 billion USD) in profits, up ¥200 billion ($1.30 billion) from its previous projection.
However, in its interim financial results for the nine months ended September 2025, Toyota reported an operating loss of ¥134.1 billion ($870 million) in North America due to the Trump administration's high tariffs.
It marked Toyota's first interim operating loss in North America since the 2008 financial crisis, highlighting the heavy impact of Washington's trade policies.
Facing Tariff Pressure
"At present, the break-even point (the sales volume needed to turn a profit) has risen significantly," Toyota's CFO Kenta Kon said at the earnings briefing on the 5th, while describing the challenging business environment.
Driven by strong hybrid vehicle demand, consolidated sales in North America during the interim period rose sharply, climbing 13.8% year-on-year to 1.533 million units. But the impact of tariffs pushed operating profits into the red, down from a ¥128.1 billion ($831 million) profit in the same period in 2024.
Even in the same period last year, the operating profit margin in North America was low at 1.3%, partly due to rising labor costs.
New vehicle sales are expected to remain steady in the second half, supported by "strong demand for increased hybrid vehicle production," according to the CFO.
Yet making a noticeable improvement in profitability is unlikely, as the company doesn't plan to implement immediate price increases to offset the tariff burden.
Strong Performance Outside
Despite headwinds in its key market, Toyota was able to revise its full-year operating profit forecast owing to its regionally balanced profit structure. Takanori Azuma, head of the Accounting Group, said this structure allows "the global Toyota network to absorb US tariffs."
By region, Japan had an operating profit of ¥1.1184 trillion ($7.26 billion), with a profit margin of 10.6%. In Asia, operating profits reached ¥445.1 billion ($2.89 billion), or 10.0% profit margin.
Other regions, including Africa, also saw strong growth. Operating profits in these areas rose to ¥199.1 billion ($1.29 billion), up ¥73.8 billion ($479 million) from the previous year. The margin also improved sharply, rising from 5.9% to 8.6%.
"Ten years ago, our revenue structure depended heavily on North America, and the impact of tariffs would have been far greater then," Azuma added.
He noted that the company's regional-based management approach, which focuses on developing products closely aligned with customer needs worldwide, has provided some resilience against Trump tariffs.
At the same time, however, Toyota's aggressive expansion outside North America has put pressure on its competitors' profits. The latest development highlights the hurdles automakers face in navigating Trump-era tariffs.
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Author: Noboru Ikeda, The Sankei Shimbun
(Read this in Japanese)
