Toyota's Profit Falls 37% Amidst Tariff Concerns and Exchange Challenges

Tokyo, Aug 7 (AP) Toyota's profit saw a sharp decline of 37% in the April-June quarter, as announced by the company on Thursday. The financial setback has led to a substantial reduction in the company's full-year earnings forecast, largely attributed to the tariffs imposed by President Donald Trump.

According to the Japanese automaker, the report was prepared under the assumption that Trump's tariffs on exports from Japan, including autos, would be set at 12.5% starting this month. Currently, these tariffs stand at 15%.

Known as the world’s leading automaker, Toyota also manufactures vehicles in both Mexico and Canada. The company reported a profit of 841 billion yen (USD 5.7 billion) for the last quarter, a significant drop from 1.33 trillion yen in the same period the previous year, despite a 3% rise in quarterly sales.

The future of exports from these regions remains uncertain. However, Mexico and Canada benefit from the US-Mexico-Canada Agreement, a revised version of a 1990s deal established during Trump's first term, which eliminated most tariffs and trade barriers among the three countries.

Toyota Motor Corp.'s profit for the April-June period totaled 841 billion yen (USD 5.7 billion), down from 1.33 trillion yen in the comparable period of 2024. Quarterly sales rose by 3%, reaching 12 trillion yen (USD 82 billion).

The company revealed that the tariffs impacted its quarterly operating profit by 450 billion yen (USD 3 billion). Additional challenges such as unfavorable exchange rates and cost reduction efforts further compounded the financial impact.

Toyota, known for popular models like the Camry sedan and Lexus luxury vehicles, has projected a profit of 2.66 trillion yen (USD 18 billion) for the full fiscal year ending in March 2026. This projection marks a decrease from the earlier forecast of a 3.1 trillion yen (USD 21 billion) profit, particularly after earning nearly 4.8 trillion yen in the previous fiscal year.

“Despite the challenging external environment, we continue to make comprehensive investments and improvements, including increased unit sales, cost reductions, and expanded value chain profits,” Toyota stated in a release detailing its efforts to mitigate tariff impacts.

At the retail level, Toyota experienced an increase in global vehicle sales, reaching 2.4 million units. This is an improvement from the previous year’s global retail total of 2.2 million vehicles, with sales growth observed in Japan, North America, and Europe.

Analysts suggest that Toyota might be among the most adversely affected global companies due to the tariffs, even when compared to other Japanese automakers. (AP)

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