Toyota Faces Second Consecutive Profit Decline as U.S. Tariffs Weigh
Toyota Motor Corp., the world’s largest automaker, is expected to post a second straight quarterly drop in operating profit on Wednesday. Analysts attribute the decline to the ongoing impact of U.S. tariffs and global supply-chain risks, even as the company continues to record strong worldwide sales of hybrid vehicles.
According to LSEG data, the automaker’s operating profit for the July–September quarter is projected to fall 25% year-on-year to 863.1 billion yen ($5.72 billion), based on estimates from eight analysts. If confirmed, this would mark Toyota’s weakest quarterly performance since late 2022, underlining the pressure of macroeconomic headwinds despite months of record earnings supported by strong hybrid demand and a favorable yen exchange rate.
Analysts Eye Possible Guidance Changes
Market analysts say investors are closely watching whether Toyota will revise its guidance.
“Given the weaker yen and the 15% U.S. tariff rate, there’s potential for an upward revision, though it’s uncertain if the company will act on it,” said Seiji Sugiura, senior analyst at Tokai Tokyo Intelligence Laboratory.
Strong Global Sales Despite Challenges
Toyota and its Lexus luxury division sold 7.8 million vehicles globally in the first nine months of 2025, a 5% increase from the same period last year. Growth was fueled by rising demand for hybrid cars, especially in the United States — Toyota’s largest market — where sales jumped 8% year-on-year.
In China and India, sales climbed 5% and 12%, respectively, reflecting solid momentum in Asia despite ongoing trade challenges.
Tariffs and Profit Forecast Pressure
Toyota continues to face import tariffs of 15% imposed by Washington on Japanese-made vehicles. In August, the company estimated the levies could reduce annual earnings by 1.4 trillion yen and cut its full-year operating profit forecast by 16%, to 3.2 trillion yen. Investors are awaiting updates this week to see whether further revisions will follow.
Hybrid vehicles accounted for 42% of Toyota and Lexus sales in the six months ending in September, while fully electric models represented less than 2% of total sales — underscoring Toyota’s continued reliance on hybrids over battery EVs.
Market Outlook and Share Performance
Toyota’s shares have inched up less than 1% since late last year, lagging behind the 29% surge in Japan’s Nikkei index. The modest performance highlights investor caution amid economic uncertainty, rising tariffs, and shifting global demand patterns.
Despite near-term headwinds, Toyota remains well-positioned in the hybrid segment, with analysts noting the company’s ability to balance profitability and innovation even in volatile markets.
