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Toyota has warned operating profits will fall 21 per cent this fiscal year due to the fallout from President Donald Trump’s trade war, increasing the pressure on Japan to reach a deal on tariffs with the US.
For its year ending in March 2026, the world’s biggest carmaker by vehicles sold said it expected an operating profit of ¥3.8tn ($26bn) compared with ¥4.8tn in the year just ended. The forecast “tentatively” includes an estimated US tariff impact of ¥180bn for the months of April and May.
Koji Sato, Toyota chief executive, said that since Japanese government officials “are working hard right now and the details of tariffs are still moving, it remains very hard to predict the future. But at the moment, there are already tariffs that are being imposed, and that part has been reflected in our forecast for this fiscal year”.
“In the short term, we have to look at how we allocate the cars. But over the medium to long term, appropriate products for the local area should be produced locally and delivered locally,” he added.
Chief financial officer Yoichi Miyazaki said the carmaker would not make “hasty” decisions but could raise prices based on demand.
“So far, customer demand has been very strong, and in the past, we’ve raised prices when demand was high,” he added.
The US president has recently offered relief to carmakers to soften the impact of his 25 per cent tariffs on imports of foreign-made cars and parts.
But the evolving nature of Trump’s levies has thrown the global car industry into turmoil, with Mercedes-Benz, Volvo Cars and Ford pulling their guidance for this year, while General Motors has warned of an up to $5bn hit from tariffs.
Japanese manufacturers remain exposed as they export some of the vehicles they sell in the US from Japan, with Toyota sourcing about 26 per cent of its vehicles sold there from its home country, according to Bernstein research.
Some car executives are hopeful though of more Trump concessions, with BMW chief executive Oliver Zipse predicting on Wednesday that the 25 per cent tariffs could be lowered from July.
The US is also expected to announce a new trade pact with the UK that could grant lower-tariff quotas for British car and steel exports. Japanese officials have also indicated a trade deal with the US could be reached in June.
In its fourth quarter, Toyota’s operating profit was almost flat year on year at ¥1.2tn, while revenue increased 12 per cent to ¥12.3tn.
While Toyota grapples with tariff effects, Japan’s biggest company is also considering a $42bn move to take a key subsidiary private.
Akio Toyoda, grandson of Toyota’s founder, is considering investing his personal money to lead a buyout of Toyota Industries, which makes industrial equipment and vehicles, according to people close to the discussions.
Toyota Motor, which has a complex series of cross-shareholdings with its subsidiaries, is also considering investing, say the same people, in what would be one of the world’s largest buyouts.
The move, which came to light last month, has sparked speculation that other big industrial groups would accelerate discussions over potential acquisitions or buyouts of listed subsidiaries.
Toyota Industries shares rose sharply on the news and remain up 36.5 per cent this year. Toyota Motor is down slightly over the same period.
The Tokyo Stock Exchange has been increasing pressure on companies to address so-called parent-child listings, where major industrial groups maintain significant shareholdings in their listed subsidiaries, and Toyota’s move could spur more action.
On Thursday, telco NTT said it would hold a board meeting later in the day to discuss a potential tender offer for the shares it does not already own in its subsidiary NTT Data, one of the world’s biggest operators of data centres. The deal could be valued at close to $20bn.
