Toyota expects $1.6 billion profit hit in two months from tariffs

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 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 in March 2026 falling far short of analyst expectations for 4.7 trillion yen.

The carmaker said its latest annual operating profit was 4.8 trillion yen, well below the record 5.35 trillion yen for the 2024 fiscal year – a record for any Japanese company.

The manufacturer ended the fiscal 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 Koji Sato said at a briefing following the results.

Toyota will consider building out local product development and manufacturing in the US in the medium to long term, he said.

Toyota joins some of the world’s best-known companies in sounding the alarm about the likely costs of Mr Trump’s tariffs.

The auto industry is set to be hit particularly hard, with ever-changing trade policies sparking chaos across the complex web of firms that make up the global supply chain.

Some carmakers such as Stellantis and Mercedes-Benz Group have pulled their earnings forecasts entirely, while others have warned of substantial blows to their bottom lines.

General Motors slashed its profit outlook due to as much as US$5 billion (S$6.5 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.

Separately, on May 8, Mitsubishi Motors said it could suffer a 40 billion yen hit from tariffs. That was reflected in its forecast for 100 billion yen in full-year operating income, which fell short of analyst expectations.

Last week, Mr Trump offered some relief to the industry by signing a directive that would exempt imported automobiles from separate tariffs on aluminium and steel.

That came alongside a separate proclamation that allows carmakers that produce and sell completed automobiles in the US to claim an offset worth up to 3.75 per cent of the value of US-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.

The impact of tariffs has seen Nissan Motor halt US orders for sport utility vehicles 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 is made in the US as a temporary countermeasure.

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 in 2024, 28 per cent of Nissan’s and 71 per cent of Subaru’s, according to Bloomberg Intelligence. Of the roughly 5.9 million vehicles that Japan’s manufacturers sold in the US in 2024, around half were imported.

Major 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 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 is not going to raise prices because tariffs were implemented, he added.

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.

The carmaker said electrified vehicles, including gas-electric hybrids and battery-electric vehicles, accounted for 46 per cent of sales in 2024. BLOOMBERG