US tariffs, strong yen and expensive material weigh on Toyota's earnings outlook

The Japanese Toyota Group is currently the largest car manufacturer and operates globally, which is why its economic data is being followed with particular interest. It is also suffering from the US tariffs, as well as the current strength of the yen and increased material prices. Market observers are therefore surprised that the group lowered its profit outlook significantly in its forecast presented today, but “only” by around EUR 1.3 billion, corresponding to around 16% for operating profit for the year as a whole.

Strong yen, expensive materials and US taxes are a burden

Toyota expects an operating profit of 3.2 trillion yen, compared to the previous forecast of 3.8 trillion yen. The main reasons for this are currency differences, US import duties, and higher material prices. The US tariffs alone could therefore reduce profits by 1.4 trillion yen, or around 8 billion euros, for the entire financial year. This is expected to result in an operating loss for the North American market.

From April to June, operating profit fell from 1.31 to 1.17 trillion yen compared to 2024. This result exceeded market expectations. A survey of seven market observers had given an average of 902 billion yen as the expected operating profit.

Increase targeted in the USA despite tariffs

In this quarter, Toyota sold 2.4 million vehicles, a good seven percent more than a year earlier, and thus increased its turnover by 3.5 percent to 12.3 trillion yen. Net profit, however, fell by more than a third to 841 billion yen in this period. Toyota's annual target is around 9.8 million cars for the rest of the year. Despite the burden of the US tariffs, the group even wants to increase its sales in North America to almost three million vehicles.

Overall, i.e., including the investments not included in the result, such as in China, the Japanese car manufacturer is even sticking to a target of around 11.2 million deliveries to end customers. Close on its heels, but apparently with less momentum, is Volkswagen, where deliveries are expected to stagnate at around 9 million vehicles across all brands in 2025.

The transition to electromobility, where Toyota has been conspicuously reticent for a long time, is obviously a particular challenge. Its electric cars, which only came onto the market late, have shown weaknesses up to the current generation, some of which other manufacturers have already overcome. The next generation promises to be much better – Toyota is obviously learning quickly.

(fpi)