Toyota signage at the New York International Auto Show on April 2, 2026 in New York City.
Daniel DeVries | CNBC
Japan’s Toyota Motor Corp. on Friday reported a 49% drop in fourth-quarter operating profit, below analysts’ expectations, as U.S. tariffs and increased competition from Chinese automakers weighed on revenue.
Below is a comparison of Toyota’s results with LSEG’s median estimate.
Sales: 12.6 trillion yen against the forecast of 12.6 trillion yen Operating income: 569.4 billion yen against the forecast of 813.28 billion yen
The world’s largest automaker by unit sales saw sales rise 1.89% year-on-year in the fourth quarter ending in March, in line with expectations.
Operating profit declined year over year for the fourth consecutive quarter, reflecting continued pressure from US tariffs.
Net income attributable to the Company was 817.2 billion yen, compared to 664.6 billion yen in the same period last year.
Toyota’s consolidated car sales in the fourth quarter decreased from 2.36 million units in the same period last year to 2.29 million units.
Toyota has revised down its operating profit forecast for the fiscal year ending March 2027 by more than 20% to 3 trillion yen, while raising its revenue forecast by 0.6%.
“Break-even sales have recently increased significantly due to increased investments in human resources, future-oriented investments, and the impact of U.S. tariffs,” the company said in its earnings report.
The automaker said in a press conference on Friday that it adopted a six-month average rather than the usual monthly average as its currency assumption, citing the current volatility. Toyota has set the expected average exchange rate during the period at 150 yen to the dollar.
The weaker yen has made exporters like Toyota more competitive by making products cheaper for foreign buyers and increasing the value of foreign profits when converted into currency.
Toyota said that although it expects capital investment to stabilize going forward, research and development expenses have reached a record high due to certification-related issues and production capacity constraints.
The company also said it continues to cut costs and eliminate wasteful production, but expects expenses to increase due to the Middle East conflict and inflation.
According to a May 5 report from Price Target Research, Toyota Motor Corporation’s asset productivity declined throughout the period from 2016 to 2025, with asset turnover trending slightly downward.
Toyota is facing challenges, weighed down by sluggish sales in the Chinese auto market, vehicle recalls, increased competition from competitors in the electric vehicle field, and President Trump-related tariffs.
The company saw its U.S. quarterly sales decline in the first quarter due to concerns about affordability and fuel price pressures from the Middle East conflict. Toyota is also trying to navigate its production plans amid tariffs and other regulatory changes.
In March, the company announced it would invest a total of $1 billion in two U.S. factories as part of a plan to invest up to $10 billion over the next five years.
Toyota anticipates growth in the battery electric vehicle sector in China, Europe, and North America, and plans to expand its business in these regions.
Toyota shares traded 2.18% lower in Tokyo on Friday.
