In its annual financial report for the fiscal year ending March 2025, Toyota announced a 33% decline in net profit for the final quarter, reaching ¥664.6 billion (approximately $4.6 billion). This drop occurred despite an increase in vehicle sales.
Key Reasons for the Profit Decline:
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New U.S. Tariffs: The imposition of a 25% tariff on imported vehicles to the U.S. cost Toyota ¥180 billion (around $1.25 billion) in April and May.
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Rising Raw Material Costs: Increased prices for raw materials have put pressure on the company’s profit margins.
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Currency Fluctuations: The strengthening of the Japanese yen against the U.S. dollar negatively impacted Toyota’s overseas earnings.
Forecast for Fiscal Year 2026:
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21% Decline in Operating Profit: Toyota expects operating profit to fall to ¥3.8 trillion (approximately $26 billion) in the next fiscal year.
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Global Sales Growth: Global vehicle sales are projected to rise by 1.7%, reaching 11.2 million units.
Strategic Measures:
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Focus on Hybrid Vehicles: With strong demand for hybrids such as the Prius and Camry, Toyota is increasing its focus on this segment.
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Considering Production Relocation: To mitigate the impact of tariffs, Toyota is evaluating moving production of popular models like the RAV4 to the U.S.
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Potential Full Acquisition of Toyota Industries: Toyota is exploring a full acquisition of Toyota Industries, valued at $42 billion, which could significantly alter its ownership structure.
Stock Performance:
Toyota shares have declined 13% so far in 2025, compared to an 8% drop in the Nikkei 225 index. This decline reflects investor concerns over tariffs and currency volatility.
Note: Despite current challenges, Toyota remains the world’s largest automaker and is actively adjusting its strategies to navigate the evolving global market.
