Toyota profits hit by rising costs and U.S. tariffs

Toyota is expected to report a third consecutive quarterly decline in operating profit as rising costs and U.S. import tariffs continue to pressure earnings, despite strong global sales and growing demand for hybrid vehicles.

Analysts forecast the world’s largest automaker will post operating profit of about 1.09 trillion yen ($6.95 billion) for the October–December quarter, roughly 10% lower than the same period a year earlier, News.Az reports, citing Reuters.

The expected decline comes even as Toyota maintains a strong global market position. The company sold a record 10.5 million Toyota and Lexus vehicles worldwide in 2025, with especially strong performance in the United States, its largest market.

Hybrid vehicles remain a key strength for Toyota, accounting for about 42% of total sales. Demand for hybrids has helped offset slower growth in the global auto market, where manufacturers increasingly compete for market share rather than relying on overall demand growth.

While battery electric vehicles make up less than 2% of Toyota’s global sales, analysts say the company’s hybrid strategy has helped maintain profitability and customer demand across multiple markets.

Currency movements could also influence results. The weaker Japanese yen may provide some financial upside, potentially offsetting part of the cost pressures from higher labor expenses, raw material prices and import tariffs.

The results also come as Toyota faces increased investor scrutiny, including debate over its plan to privatize affiliate Toyota Industries.

Despite short-term profit pressure, Toyota has maintained a relatively strong outlook and previously raised its full-year profit forecast, citing higher sales volumes, cost controls and favorable currency trends.

Industry analysts say Toyota remains well positioned compared with many competitors, even as global automakers face rising production costs and increasing trade-related challenges.

News.Az 

By Aysel Mammadzada