Dive Brief:
- Toyota Motor Corp. reported a 21% year-over-year decline in net income in its FY2025 earnings report on May 8.
- The automaker cited various market uncertainties for the decline in profits, including recently imposed tariffs, which are also expected to further impact the company’s bottom line in the upcoming year.
- As a result, Toyota lowered its full-year guidance and expects its operating income to decline by 20% YoY in FY2026. At the same time, its margins are forecast to fall from 9.9% to 6.4% YoY due to expected higher supply chain costs.
Dive Insight:
Despite the dip in net income, Toyota reported positive sales revenue of 4.8 trillion yen ($314 billion) for FY2025 ending March 31, a year-over-year increase of 6.5%. The jump helped to offset a decline in vehicle sales in key global markets, including North America, where Toyota’s sales fell 4% YoY to 2.7 million units.
The automaker also reported a vehicle sales decline of 1.6% in Europe in FY2025. However, Toyota posted modest YoY sales gains in Asia and other global markets. While sales in the automaker’s home market of Japan remained virtually unchanged.
Toyota cited steady improvements in its cost-cutting efforts, including price revisions and expansion of value chain earnings, for the increase in sales revenue, which helped to offset the double-digit decline in net income.
One bright spot in Toyota’s FY2025 earnings report was brisk sales of electrified vehicles, which jumped 23.2% YoY to 4.7 million units. Toyota Motor North America reported sales of 288,796 electrified vehicles in the U.S. in Q1, a YoY increase of 39.6%.
These models, which include both electric vehicles and hybrids, accounted for 46.2% of Toyota’s global vehicle sales in FY2025. Toyota expects this momentum to continue in the year ahead, with electrified vehicle sales topping 5 million units or nearly half of its global vehicle sales.
Despite maintaining its vehicle sales momentum in challenging market conditions, Toyota and other automakers face uncertainties in the upcoming fiscal year over the looming impact of tariffs on imported vehicles and parts.
In February, Toyota posted a YoY operating profit decline of nearly 28% in Q3, its second consecutive quarterly decline in over two years.
While other automakers, including General Motors and Ford Motor Co., have suspended their full-year guidance due to uncertainties surrounding tariffs and potential higher supply chain costs, Toyota is maintaining its vehicle sales forecast. However, it expects that its net profit will sharply decline in FY2026.
Toyota’s guidance targets global sales of 9.8 million vehicles and a slight increase in sales revenue. But it expects that net income will fall by roughly 34% from 4.7 trillion yen ($31.8 billion) to 3.1 trillion yen ($21.6 billion). Toyota said that the impact of U.S. tariffs in April and May 2025 has already been factored into its guidance.
