TOKYO – Japan’s leading automaker Toyota Motor Corporation has posted a sharp 19% decline in full-fiscal-year profit for the 12 months ending March 2025, with former U.S. President Donald Trump’s trade tariffs and unfavorable currency fluctuations identified as the primary drags on its bottom line.
Released on Friday, the company’s financial results show net profit landed at 3.85 trillion Japanese yen, equivalent to roughly $25 billion, down from 4.8 trillion yen in the prior fiscal year. Toyota, which produces popular nameplates including the Camry sedan, Prius hybrid, and Lexus luxury line, estimated that Trump-era tariff policies alone carved 1.4 trillion yen ($9 billion) off its annual operating income. Unfavorable foreign exchange swings further compressed profit margins for the global manufacturer, which is headquartered in Toyota City, central Japan.
Despite the profit decline, Toyota outperformed many analyst expectations in key operational metrics. Global vehicle sales rose to nearly 9.6 million units from 9.4 million in the previous year, while total annual revenue climbed 5.5% to 50.7 trillion yen ($323 billion), up from 48 trillion yen a year prior. On a quarterly basis, the brand closed out the fiscal year with strong momentum: January to March profit jumped 23% year-over-year to 817 billion yen ($5.2 billion), from 664 billion yen, while quarterly sales edged up nearly 2% to 12.6 trillion yen ($80 billion).
Looking ahead to the current fiscal year running through March 2026, Toyota is maintaining a cautious outlook amid escalating geopolitical risk in the Middle East. The company projects it will again sell 9.6 million vehicles globally, while forecasting a relatively modest annual profit of 3 trillion yen ($19 billion). The ongoing conflict between Iran and Israel, which has effectively closed the Strait of Hormuz — a critical global shipping chokepoint for energy and trade — has created significant uncertainty for the manufacturer. Toyota expects persistent supply chain disruptions from the strait closure, and has already recorded a drop in regional vehicle sales across the Middle East.
As Japan relies on imports for nearly 100% of its oil, much of which comes from Middle Eastern producers, the conflict has driven sharp increases in oil and raw material prices. Additionally, rerouting cargo to avoid the Strait of Hormuz adds substantial fuel and labor costs to Japanese importers, a pass-through expense that hits manufacturing giants like Toyota directly.
Beyond near-term financial headwinds, Toyota reaffirmed its long-term strategic vision to transition from a traditional automaker to a diversified mobility company. The brand confirmed plans to expand its product portfolio beyond passenger vehicles to include personal watercraft and small aircraft, alongside innovation in adjacent industrial and service sectors. Current development projects include robotic arms designed to restock retail store shelves and autonomous transport devices for medical equipment in hospitals. To support this transformation, Toyota announced it will streamline operations, rationalize its vehicle model lineup, increase local component sourcing to cut supply chain risk, and implement company-wide cost reduction initiatives.
Following the release of the earnings report, Toyota’s share price declined 2.2% in Tuesday trading in Tokyo.