[TOKYO] Toyota Motor said US President Donald Trump’s tariffs will result in a 180 billion yen (S$1.6 billion) hit to operating income in just two months, with the Japanese carmaker joining a growing list of companies grappling with the fallout of trade turmoil.
The company said on Thursday (May 8) that the impact for April and May has been tentatively factored in, and the situation remains uncertain. That is set to weigh on its full-year results, with its outlook for operating income of 3.8 trillion yen for the year ending Mar 31, 2026 falling far short of analyst expectations of 4.7 trillion yen.
The carmaker said operating profit for its latest financial year was 4.8 trillion yen, well below the record 5.35 trillion yen for the 2024 fiscal year – an all-time high for any Japanese company. It reported a lukewarm finish to the year, with profit rising 0.3 per cent in the fourth quarter to 1.1 trillion yen.
“When it comes to tariffs, the details are still incredibly fluid so it’s difficult to take steps or measure the impact,” chief executive officer Koji Sato said at a briefing after the results. Toyota will consider building out local product development and manufacturing in the US in the medium to long term, he said.
Toyota shares initially rose after the results, before closing 1.3 per cent lower in Tokyo. The stock is down about 15 per cent this year.
Mounting costs
Toyota joins some of the world’s best-known companies in sounding the alarm about the likely costs of Trump’s tariffs. The automotive industry is set to be hit particularly hard and the ever-changing trade policies have sparked chaos across the complex web of firms that make up the global supply chain.
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Some carmakers such as Stellantis and Mercedes-Benz Group have pulled their earnings forecasts entirely, while others have warned of substantial impacts to their bottom lines. General Motors slashed its profit outlook due to as much as US$5 billion of exposure to auto tariffs, while Ford Motor suspended its full-year financial guidance amid expectations of a US$1.5 billion hit to results.
Last week, Trump offered some relief to the industry by signing a directive that would exempt imported vehicles from separate tariffs on aluminium and steel. That came alongside a separate proclamation that allows carmakers that produce and sell completed vehicles in the US to claim an offset worth up to 3.75 per cent of the value of American-made vehicles – a temporary reprieve from the 25 per cent tariff on imported parts that took effect on May 3.
Toyota has maintained that it will stay the course when it comes to its operations in the US. Meanwhile, the impact of tariffs has seen Nissan Motor halt US orders for SUVs built in Mexico, while Honda Motor is shifting production of the hybrid version of its Civic from Japan to the US. Mazda Motor will stop exporting one model type to Canada that’s made in the US as a temporary countermeasure.
Sale surge
The US is the largest market for five of Japan’s biggest carmakers. It accounted for around 23 per cent of Toyota’s global sales last year, 28 per cent for Nissan and 71 per cent for Subaru, according to Bloomberg Intelligence. Of the roughly 5.9 million vehicles that Japan’s manufacturers sold in the US last year, about half were imported.
Big Japanese carmakers, including Toyota, saw a surge in US sales in March as customers rushed to lock in purchases before the tariffs kicked in and potentially add thousands of US dollars to car prices.
“It’s unlikely we’ll make a big pivot since we’re still waiting to see the results of ongoing trade negotiations,” said chief financial officer Yoichi Miyazaki. In the short term, Toyota isn’t going to raise prices because tariffs were implemented, he said.
Despite the uncertainty hanging over the sector, Toyota predicted global consolidated sales to increase to 11.2 million units this fiscal year from 11 million a year earlier. It said electrified vehicles, including gas-electric hybrids and battery electric vehicles, accounted for 46 per cent of sales last year.
Still, Sato walked back a pledge he made shortly after becoming CEO in 2023 that Toyota would sell 1.5 million battery EVs by 2026. That goal will be revised based on changes in demand, he said on Thursday, while reiterating the importance of offering hybrid models to appeal to a broad range of customers.
As well as the fallout of US tariffs on Toyota, investors are assessing the impact of chairman Akio Toyoda’s attempted buyout of loom and car parts business Toyota Industries Corp. His proposal values the latter at 6 trillion yen and would it rank among the biggest buyouts on record globally.
When asked about the potential deal, Sato declined to share any details about plans for further integration within the Toyota group, though he reiterated the importance of Toyota Industries as a materials business to the carmaker and the broader business. BLOOMBERG
