Toyota Motor Corp predicts a 21% decline in operating profit for the fiscal year ending March 2026, citing mounting difficulties such as U.S. tariffs initiated by the administration of President Donald Trump and a rising yen, despite strong demand for hybrids.
The largest automaker in the world anticipates earnings of 3.8 trillion yen ($26 billion) for the fiscal year ending now, down from 4.8 trillion yen in the just-concluded fiscal year. The forecast is consistent with the 4.75 trillion yen average estimate of 25 analysts polled by LSEG.
One of the key concerns for Toyota is the potential ripple effect of Trump tariffs. Not only does the company stand to lose overt effects on cars being exported to the U.S., but it can also anticipate more general effects if rising prices begin to bite at home and abroad and dent consumer confidence.
At a presentation to shareholders, Toyota attributed the expected fall in profit to the stronger yen, rising costs of materials, and trade tariffs.
Like its counterparts elsewhere, Toyota may also be dealing with rising labor costs and increased capital spending, especially if it maintains its expansion of its US base of production.
While it has beaten some of its Japanese competitors in China, Toyota is still grappling with declining sales in the world's largest automobile market, where it battles fiercely with rapidly growing Chinese automakers.
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