Due to tariff threats, Toyota's Q1 profit only grew by 0.3%, and it is expected that annual profit will decline by 21% | Financial Report Insights

Toyota Motor's Q4 net profit fell 33% year-on-year, and it is expected that net profit for the fiscal year 2026 will further decline due to rising U.S. tariffs and material costs eroding company profits.

On Thursday, May 8, Toyota Motor announced its fourth-quarter results for the period ending March 31.

Q4 operating profit increased by 0.3% year-on-year to 1.12 trillion yen, estimated at 1.16 trillion yen.

Q4 dividend was 50.00 yen, compared to 45.00 yen in the same period last year.

Q4 revenue increased by 12% year-on-year to 12.3 trillion yen.

Q4 net profit was 664.7 billion yen, a year-on-year decline of 33%, estimated at 823.55 billion yen.

2026 performance guidance:

Estimated operating profit of 3.80 trillion yen, estimated at 4.69 trillion yen.

Estimated net profit of 3.10 trillion yen, estimated at 4.07 trillion yen.

Estimated net sales of 48.50 trillion yen, estimated at 48.9 trillion yen.

Estimated dividend of 95.00 yen, estimated at 97.16 yen.

According to CCTV News, the 25% tariff on imported cars imposed by Trump officially took effect on April 3. However, last week, Trump signed an executive order granting some relief to the automotive industry by exempting aluminum and steel tariffs on imported cars. Additionally, the government allowed manufacturers producing and selling complete cars in the U.S. to offset 3.75% of the 25% tariff on imported parts, providing temporary relief for car companies.

Toyota CEO Akio Toyoda stated, "The details regarding tariffs remain very uncertain, making it difficult to take measures or assess the impact." He also mentioned that Toyota will consider increasing domestic product development and manufacturing efforts in the U.S. in the medium to long term.

After the earnings announcement, Toyota's stock initially rose but ultimately closed down 1.3%, with a cumulative decline of about 15% this year. Toyota's stock fell more than 2% in pre-market trading on Thursday.

Tariffs Hit Toyota Motor's Profit Expectations

As Trump's tariff policy continues to impact global companies, Toyota Motor has also joined the ranks of affected companies, expecting an operating profit loss of 180 billion yen (approximately $1.3 billion) in just the two months of April and May.

Toyota Motor stated that this 180 billion yen loss has been temporarily accounted for, but due to the instability of the tariff policy, the future situation remains uncertain. This impact is expected to put pressure on Toyota's performance in the upcoming fiscal year, with Toyota's operating profit expectation for fiscal year 2026 at 3.8 trillion yen, far below analysts' expectations of 4.7 trillion yen Toyota also pointed out that the operating profit for the last fiscal year was 4.8 trillion yen, lower than the record high of 5.35 trillion yen set in the 2024 fiscal year. However, Toyota's operating profit in the fourth quarter only grew by 0.3%, reaching 1.1 trillion yen, showing a relatively lackluster performance.

Akio Toyoda abandoned his commitment made shortly after becoming CEO in 2023 to sell 1.5 million pure electric vehicles by 2026. He stated on Thursday that this target would be revised based on changes in demand, while reiterating the importance of offering hybrid models to attract a broader customer base.

Despite facing uncertainties regarding U.S. tariffs, Toyota remains confident about the future, predicting that global sales will reach 11.2 million units this year, an increase of about 2% from last year. Among these, electrified vehicles (including hybrids and pure electric vehicles) have accounted for 46% of sales.

Global Automakers Warn of Tariff Impact

Toyota is not the only automaker sounding the alarm over Trump's tariff policies. In fact, the entire automotive industry is facing particularly severe impacts, with Stellantis and Mercedes-Benz Group retracting their performance guidance for this year, while General Motors significantly lowered its profit outlook due to a risk of up to $5 billion in automotive tariffs.

Ford Motor has also suspended its full-year financial guidance, expecting a $1.5 billion impact on performance. Meanwhile, Mitsubishi Motors indicated it might face a loss of 40 billion yen, reflected in its forecast of 100 billion yen in annual operating income, which is below analysts' expectations.

The U.S. is the largest market for Japan's five major automakers. According to Bloomberg Intelligence, the U.S. accounted for about 23% of Toyota's global sales last year, 28% for Nissan, and as high as 71% for Subaru. Of the approximately 5.9 million vehicles sold by Japanese manufacturers in the U.S. last year, about half were imported cars.

Despite the tariff pressures, Toyota stated it will continue to maintain its operational strategy in the U.S. Meanwhile, other Japanese automakers are also adjusting their production strategies. Nissan has halted SUV exports to the U.S. from Mexico, while Honda has shifted production of the hybrid version of the Civic from Japan to the U.S. Mazda will also temporarily stop exporting a certain model manufactured in the U.S. to Canada as a temporary measure.

It is noteworthy that, on the eve of the implementation of Trump's import tariffs, a car-buying frenzy swept the U.S. market, leading to a surge in sales for Japanese automakers. Sales personnel from companies like Toyota reported that many American consumers rushed to purchase cars before the tariffs took effect to avoid future price increases due to tariff hikes. Toyota's Chief Financial Officer Koichi Miyazaki stated, "In the short term, we will not raise prices due to the implementation of tariffs; the company is still observing the results of trade negotiations."