Toyota fourth-quarter profit misses by wide margin as U.S. tariffs drive 49% slump

Toyota reported a 49% decline in its fourth-quarter operating profit, missing analysts’ expectations as higher U.S. tariffs significantly increased costs. The automaker’s vehicle sales fell to 2.29 million units from 2.36 million a year earlier, marking the fourth consecutive year of year-over-year profit declines. Despite a 1.89% rise in revenue during the quarter, Toyota lowered its full-year operating income forecast by more than 20% to 3 trillion yen, while slightly raising its sales revenue outlook. The company attributed the profit slump to a combination of increased investments in human resources and future-oriented projects, alongside the impact of U.S. tariffs that have raised its breakeven volume. In response, Toyota has initiated measures to improve earnings by reforming fixed costs, enhancing cost efficiencies, and launching sales initiatives across all regions and internal divisions. The automaker’s asset productivity has also shown a minor decline over the past decade, reflecting broader operational challenges. Toyota faces multiple headwinds including a weakening U.S. auto market, vehicle recalls, and intensifying competition in the electric vehicle sector. The ongoing tariffs, linked to policies from the Trump administration, have complicated production planning and increased costs. Additionally, geopolitical tensions and fuel price pressures stemming from the Middle East conflict have dampened U.S. sales, particularly in the first quarter. In a strategic move to counter these challenges, Toyota announced plans to invest up to $10 billion in U.S. manufacturing over the next five years, including a $1 billion commitment to two plants. Despite these efforts, the company’s shares declined 1.34% in Tokyo trading following the earnings release, underscoring investor concerns about the near-term outlook amid persistent external pressures.