Dive Brief:
- Toyota Motor Corp. posted a $3.3 billion decline in net income for the first quarter of FY2026 despite higher vehicle sales, the automaker reported Aug. 7.
- Toyota reported revenue of $82.8 billion in Q1, a YoY increase of $2.8 billion as vehicle sales remained brisk in key markets. The company sold 2.4 million vehicles in Q1 compared to 2.2 million last year, but its YoY net margin declined nearly 39%.
- The automaker cited several factors for the drop in net income, including tariffs and other market conditions, which are forecast to further impact the company’s bottom line in the upcoming year.
Dive Insight:
Toyota also updated its full-year guidance and now forecasts that its FY2026 operating income will decline by $4 billion from its previous forecast of $25.8 billion. The automaker also expects that its net margin will decrease from 6.4% to 5.5% in FY2026 as a result of higher costs. Toyota’s updated net margin forecast is nearly half of the 9.9% margin it achieved in FY2025.
In North America, Toyota reported a 12.7% YoY jump in its vehicle sales in Q1 to 794,000 units, while sales in Europe were up 2.2%, reaching 298,000 units. In Toyota's home country of Japan, vehicle sales jumped by 14.2% YoY to 481,000 units. Sales in other global markets were also up nearly 5%. However, Toyota reported that its sales in Asia fell 3.5% to 421,000 vehicles, largely due to increasing competition in China.
Sales of electrified vehicles, including hybrid and fully electric models, jumped by 17.1% in Q1, accounting for 47.6% of Toyota’s global vehicle sales volume. The automaker forecasts that sales of electrified models will reach 5.1 million units in FY2026, which is just 1% lower than its previous forecast.
Toyota’s full-year vehicle sales forecast remains unchanged at 9.8 million units. Last year, Toyota reported sales of 9.4 million vehicles globally.
Despite the challenging environment for Toyota and other major automakers, the company is working to lessen the negative impacts of tariffs. Toyota said in its earnings report that it continues to make investments and implement other improvements to boost vehicle sales and reduce costs.
Still, the automaker expects that tariffs will impact its operating income by $9.5 billion for the remainder of FY2026.
