Toyota Motor Corp is expected to deliver a modest earnings boost on Thursday, riding a wave of global demand for its hybrid vehicles — but the road ahead may not be as smooth, as looming U.S. tariffs threaten to eat into future profits.
The world’s largest automaker is forecast to report a 2% year-over-year rise in operating profit for its fiscal fourth quarter, with analysts projecting ¥1.13 trillion ($7.86 billion), according to a consensus from LSEG. This would mark Toyota’s first quarterly profit increase in three quarters.
At the heart of this resilience is the automaker’s long-standing bet on gasoline-electric hybrids like the Prius and Camry. These models continue to drive strong sales in key markets including the United States and Japan, with global deliveries rising 5% in the January–March period.
Still, the upbeat sales trend may be overshadowed by concerns over U.S. President Donald Trump’s recently enacted tariffs, which impose steep levies on foreign-made autos and parts. Investors are bracing for clues in Thursday’s earnings call about how Toyota plans to mitigate the financial impact.
“The focus is on the guidance for the fiscal year ending March 2026,” said Seiji Sugiura, senior analyst at Tokai Tokyo Intelligence Lab. “We still don’t know how or whether the Trump tariffs will be fully factored in.”
A Tariff-Shaped Cloud Over FY2025
The stakes are high. Tokai Tokyo estimates Toyota’s operating profit for the upcoming fiscal year could take a hit of as much as ¥800 billion ($5.6 billion) due to the new tariffs on U.S.-bound exports from Japan.
That figure doesn’t even account for potential secondary effects — such as a U.S. economic slowdown or tariffs on vehicles shipped from Toyota’s production hubs in Canada and Mexico, which build top-selling models like the RAV4 and Tacoma.
For now, Toyota has taken a measured approach to the tariffs, opting to tighten fixed costs rather than immediately raising prices. But that restraint may be tested if the duties drag on, especially if consumer demand in the U.S. starts to slip.
Supply Chain Tension and Toyota Industries Watch
While hybrids have been a growth driver, they’re also creating pressure on suppliers struggling to meet escalating component demand. That’s partly why analysts are closely watching Toyota’s evolving relationship with Toyota Industries, the firm’s long-time parts supplier.
Last month, Toyota confirmed it’s considering investing in a potential buyout of the supplier, which could help shore up vertical integration and reduce exposure to supply-chain vulnerabilities.
Thursday’s earnings report could include new details on that potential acquisition, and analysts will be keen to hear how it fits into Toyota’s broader strategy of cost control amid rising geopolitical and economic uncertainty.
Full-Year Picture Still Strong — But Off Record High
Despite the tariff risk and softening consumer sentiment in some regions, Toyota’s fiscal 2024 numbers are still expected to be robust. The company previously upgraded its full-year operating profit forecast to ¥4.7 trillion, which would represent a 12% drop from the previous year’s record-breaking performance, but still a strong showing given the macro environment.
The company’s conservative approach to EV rollouts and continued dominance in the hybrid space appear to be paying off — for now.
As earnings season rolls on, Thursday’s results and forward guidance will offer one of the clearest signals yet of how global automakers plan to navigate an increasingly complex mix of protectionist trade policies, shifting consumer behavior, and accelerating technology transformation.
