Toyota Slashes Earnings Forecast by Rs 357.5 Billion Amid US Tariff Jolt

Toyota Motor Corp. (TMC) has cut its annual profit forecast by ¥600 billion (approximately ₹357.5 billion), citing a significant blow from newly implemented US tariffs, according to a report by Bloomberg. The Japanese automaker now expects to post ¥3.2 trillion (approximately ₹1.91 trillion) in operating income for the fiscal year ending March 2026 — a sharp drop from its earlier projection of ¥3.8 trillion (approximately ₹2.26 trillion).

The revision comes amid sweeping tariff measures introduced by the United States under President Donald Trump, which are reshaping cost structures across the global auto industry.

In its quarterly update on Thursday, the Tokyo-based company revealed that the estimated total impact from the tariffs will reach a staggering ¥1.4 trillion (approximately ₹834.3 billion) over the course of the fiscal year. During the April-June quarter alone, the financial hit stood at ¥450 billion (approximately ₹268.2 billion).

Despite the drag, Toyota managed to deliver ¥1.17 trillion (approximately ₹697.2 billion) in operating income for Q1 — down 11% year-on-year but still ahead of analyst expectations of ¥890 billion (approximately ₹530.3 billion), aided in part by strategic price increases in key markets.

The new outlook reflects Toyota’s most comprehensive assessment yet of the unfolding tariff impact, surpassing its initial estimate earlier this year of a ¥180 billion (approximately ₹107.3 billion) dent for just April and May.

Industry-wide turbulence

Toyota's revised figures place it ahead of peers in quantifying the toll of protectionist trade policies. Other global automakers are also feeling the pinch: Ford expects a $2 billion hit, Stellantis NV projects a €1.5 billion loss, while General Motors has flagged exposure in the range of $4 billion to $5 billion, according to Bloomberg.

Among Japanese competitors, the tariff estimates remain lower. Honda sees a ¥450 billion (approximately ₹268.2 billion) impact, Nissan anticipates ¥300 billion (approximately ₹178.8 billion), and Subaru estimates ¥210 billion (approximately ₹125.1 billion).

Toyota’s shares dipped by as much as 2.4% in Thursday trading in Tokyo before paring losses to close down 1.5%.

Despite the gloomy guidance, analysts see room for resilience. “Toyota tends to adopt a cautious tone in its forecasts. Current trends across Japan, North America, and China may provide upside potential,” said Tatsuo Yoshida, senior auto analyst at Bloomberg Intelligence. He added that Toyota is likely exploring supply chain changes to reduce its exposure on US-bound exports.

Also Read: Auto Shockwave: Toyota, Nissan, Ford Suppliers Reel As U.S. Tariffs Trigger Industry Turmoil | Republic World
 

Tariffs and trade diplomacy

Under a new trade deal struck in July, Japanese automakers now face a 15% tariff on vehicles exported to the US. Although lower than the feared 25%, the tariff rate still adds considerable pressure. Additionally, key aspects of the deal — including potential tariff discounts for the EU, Japan, and South Korea — remain unresolved, fueling further uncertainty.

Toyota has responded diplomatically, expressing hope that the agreement marks a step toward better relations between the US and Japan. The company has also urged policymakers to consider further tariff relief.

Sales surge despite headwinds

Amid these headwinds, Toyota continues to post impressive sales numbers. The carmaker delivered a record 5.5 million vehicles globally in the first half of 2025 — a 7.4% increase from the same period last year — driven largely by robust demand for hybrid models in the US, China, and domestic markets.

Full-year global sales are expected to reach 11.2 million units. To support long-term output, Toyota also plans to build a new manufacturing facility in Aichi, Japan, with operations targeted to begin in the early 2030s. The plant is part of the company’s broader effort to maintain domestic production volumes at the 3-million-unit mark.