Latest news with #ToyotaCity-based
Miami Herald
07-08-2025
- Automotive
- Miami Herald
Toyota Posts Double-Digit Losses as Tariffs Impact Its Bottom Line
In an announcement on August 7, Tokyo time, Japanese auto giant Toyota said that it expects to lose 1.4 trillion yen (~$9.5 billion) from its operating profit by the end of its 2025-2026 fiscal year due to the Trump administration's hefty tariffs on cars imported to the U.S., which is driving up costs and eating into Toyota's earnings. At the same time, Toyota lowered its full-year net profit forecast by 14%, bringing it down to 2.6 trillion yen (~$17.65 billion). This is a sharp drop from its original estimates, which only accounted for tariffs during April and May, which cost it 180 billion yen (~$1.2 billion). The pain and the money leaving the Toyota City-based automaker's coffers are already showing. During its first fiscal quarter from April to June 2025, Toyota posted a net profit of 841 billion yen (~$5.7 billion), a staggering loss of 36.9% compared to the same period last year. This sharp decline reflects not only the U.S. tariff, which jumped from 2.5% to 27.5% in April, but also the effects of a stronger yen-to-dollar exchange rate. Despite this setback, some relief is on the horizon thanks to a trade deal between the Trump administration and the Japanese government. Last month, they agreed to reduce tariffs on Japanese cars by 15%. Toyota believes this new rate could help mitigate the impact, but the damage has already been done. "[The U.S. tariff] has risen to 15% from the previous 2.5%, which obviously has a significant impact," Takanori Azuma, chief officer in the accounting group at Toyota, said during a news conference on August 7. "And it is a thing we are not able to control. The major challenge is to ensure that our North America business generates solid profits. The result [of a trade deal] remains tough." Part of that process is a few strategic adjustments. Already, in June, it announced it would raise prices for U.S.-market vehicles by an average of $270 on Toyotas produced from July 1, with further hikes possible if the market allows, according to Azuma. Additionally, Toyota's head accountant noted that the company would utilize excess production capacity, adding that it aims to "refine our operations by considering every possible scenario." Azuma emphasized that Toyota is also working to reduce its reliance on the U.S. market, which still accounts for about 33% of its global vehicle sales. "Our [revenue] balance that different regions can cover each other when America catches a cold, is finally coming into place," he said. Tariffs aren't Toyota's only headache. Currently, fluctuations in the Yen-Dollar exchange rate are expected to cost the company another 725 billion yen (~$4.9 billion). Additionally, the rising cost of materials is expected to reduce profits by an additional 300 billion yen (~$2 billion). Combined, these have caused Toyota to lower its projected full-year earnings by 44.2%. Despite the challenge, Toyota remains focused on achieving its sales target of 48.5 trillion yen (~$328.98 billion) in net sales revenue by the end of March 2026. In the April-June quarter, Toyota's sales revenue increased by 3.5%, reaching 12 trillion yen (~$81.38 billion), while its operating profit declined by 10.9% to 1.1 trillion yen (~$7.45 billion). The tariffs alone reduced operating profit by 450 billion yen (~$3.05 billion) during the fiscal quarter. Toyota's sales are still strong. Global vehicle sales rose 7% to 2.4 million units in its fiscal first quarter, with North America seeing a 12.7% boost and Japan increasing by 11.4%. Surprisingly, Toyota even shipped more cars from Japan to the U.S. after the 25% tariffs on imported vehicles were introduced in April. Toyota's exports in May rose by 22.9% year-over-year to 41,573 vehicles, and June saw a 15.9% jump to 52,745 units. Looking ahead, Toyota announced it will build a new plant in its hometown of Toyota City, with operations expected to begin in the early 2030s. Details are scarce for now, but Azuma clarified that Japan is its home and Toyota City is its home base. "Our top priority is to maintain the production base of 3 million vehicles in Japan," Azuma said. "This is the foundation of Toyota's business, enabling us to expand manufacturing and development in each region. We want to work together to protect it, including through measures to stimulate domestic demand." Toyota isn't alone in facing these tariff troubles. This week, Honda revealed that its first-quarter earnings fell to ¥244.1 billion (~$1.69 billion) from ¥484.7 billion (~$3.35 billion), on account of tariffs and its own internal struggles with EVs. Meanwhile, Mazda lost ¥46 billion due to its reliance on imports in the U.S. market. Both companies are now looking to shift more production to the U.S. and are rethinking their export strategies. Ultimately, Toyota and other Japanese automakers face challenges playing ball in their largest market, the United States. However, as time progresses under these conditions, it would not be far-fetched to see automakers drastically change themselves and/or their U.S.-market lineups within the near future. Copyright 2025 The Arena Group, Inc. All Rights Reserved.
The Star
13-05-2025
- Automotive
- The Star
Toyota faces biggest impact from Trump tariffs
Tokyo: Toyota Motor Corp is the biggest carmaker in the world –and also the auto industry's biggest loser when it comes to projected losses from US President Donald Trump's trade war. Duties on imported cars and auto parts forced General Motors Co to slash its full-year profit guidance by as much as US$5bil, while Ford Motor Co is bracing for a US$1.5bil annual hit. Toyota sees a US$1.2bil profit drop in just two months. While the Japanese automaker didn't provide a tally for all of this year, it did project operating income of 3.8 trillion yen or about US$26.1bil for its financial year ending March 2026 – far below the 4.7 trillion yen expected by analysts. While Toyota has increased local production in the United States to more than half of sales in the country, it still relies on imports of key vehicle parts and models – to the tune of some 1.2 million cars a year. The White House has noticed, with Trump calling out the Toyota City-based automaker by name during his contentious Liberation Day speech in the Rose Garden on April 2. He complained about Toyota's 'one million foreign made automobiles' sold in the United States. The huge tariff hit reflects the company's decision to hold the line on sticker prices at US dealers and production volumes at its 11 American factories amid the start of bilateral trade negotiations between the United States and Japan. Those talks started in February and it's unclear when they will conclude with a deal. 'When it comes to tariffs, the details are still incredibly fluid,' Toyota's chief executive officer, Koji Sato, said last week after releasing the latest financial results. 'It's difficult to take steps or measure the impact.' Japan's chief trade negotiator, Ryosei Akazawa, said on April 30 that one unnamed Japanese automaker is currently losing around US$1mil per hour from the tariffs, citing a calculation made by an unidentified corporate executive. A Japanese government official last Friday declined to provide more specifics. But that rate of loss isn't too far off the mark from the US$1.2bil hit Toyota is projecting based on 730 hours per month. Representatives for Toyota also didn't respond to a request for comment. Akazawa has expressed hope that an agreement could be reached in June with the next round of negotiations taking place in late May. Most imported vehicles became subject to a 25% US duty on April 3, while most auto parts become subject to that levy as of May 3. There are some executive orders that prevent duties from doubling up, but considering the United States is the biggest market for Japan's five largest carmakers, even a moderately increase in tariffs will have an outsized impact on their bottom lines. The Trump administration reached its first trade deal on May 8 with Britain. But the United States had a US$11.9bil goods trade surplus with Britain last year, whereas it ran a US$68.5bil deficit with Japan. That may make it more difficult to secure an agreement without significant concessions by one side. 'The hurdle is high for Japan to get auto tariffs lowered' on exports to the United States, said Hiroshi Namioka, chief strategist at T&D Asset Management Co. 'At the same time, the auto industry is too important for Japan to simply go along with what the US wants.' Some Japanese automakers have responded to the tough new trade environment by making changes to their global manufacturing footprints. Nissan Motor Co halted US orders for sport utility vehicles built in Mexico while Honda Motor Co is shifting production of the hybrid version of its Civic from Japan to the United States. Due to retaliatory tariffs against the United States, Mazda Motor Co is stopping exports to Canada of one model that's manufactured at an Alabama factory that's a joint venture with Toyota. 'We will maintain our current operations while continuing to focus on reducing fixed costs, all while keeping a close eye on the movements by US authorities, including customs duties,' a spokesperson for Toyota said in a statement. Toyota has already invested heavily to build out its US operations – including spending US$13.9bil on a new battery plant in North Carolina. But it also remains committed to maintaining its extensive domestic production base. Chairman Akio Toyoda has repeatedly pledged to keep making at least three million vehicles a year in Japan. Last year, the company built 3.1 million cars in its home country, about a third of its worldwide production total. Globally, Toyota sold 10.8 million cars last year, with the United States accounting for a little less than a quarter of those. While half were made locally and another 30% came from neighbouring Canada and Mexico, some 281,000 vehicles were imported from Japan. That includes popular models such as the 4Runner mid-sized sport utility vehicle, Prius hybrid and several upscale Lexus vehicles. The company's best-sellers in the United States – the RAV4 hybrid crossover and Corolla compact sedan – are assembled at factories in Kentucky and Mississippi. But petrol-only RAV4s are imported from Canada and the plug-in hybrid comes from Japan. — Bloomberg
Straits Times
12-05-2025
- Automotive
- Straits Times
Toyota faces biggest hit from Trump tariffs among automakers
Toyota has upped production in the US to more than half of sales in the country, but it still relies on imports of key vehicle parts and models. PHOTO: AFP TOKYO - Toyota Motor is the biggest carmaker in the world – and also the auto industry's biggest loser when it comes to projected losses from US President Donald Trump's trade war. Duties on imported cars and auto parts forced General Motors to slash its full-year profit guidance by as much as US$5 billion (S$6.5 billion), while Ford Motor is bracing for a US$1.5 billion annual hit. Toyota sees a US$1.2 billion profit drop in just two months. While the Japanese automaker did not provide a tally for all of 2025, it did project operating income of 3.8 trillion yen (S$34 billion) for the fiscal year ending March 2026 – far below the 4.7 trillion yen expected by analysts. While Toyota has increased local production in the US to more than half of sales in the country, it still relies on imports of key vehicle parts and models – to the tune of some 1.2 million cars a year. The White House has noticed, with Mr Trump calling out the Toyota City-based automaker by name during his contentious Liberation Day speech in the Rose Garden on April 2. He complained about Toyota's 'one million foreign made automobiles' sold in the US. The huge tariff hit reflects the company's decision to hold the line on sticker prices at US dealers and production volumes at its 11 American factories amid the start of bilateral trade negotiations between the US and Japan. Those talks started in February and it is unclear when they will conclude with a deal. 'When it comes to tariffs, the details are still incredibly fluid,' Toyota's chief executive officer Koji Sato said last week after releasing the latest financial results. 'It's difficult to take steps or measure the impact.' Japan's chief trade negotiator, Mr Ryosei Akazawa, said on April 30 that one unnamed Japanese automaker is currently losing around US$1 million per hour from the tariffs, citing a calculation made by an unidentified corporate executive. A Japanese government official declined to provide more specifics. But that rate of loss is not too far off the mark from the US$1.2 billion hit Toyota is projecting based on 730 hours per month. Representatives for Toyota also did not respond to a request for comment. Mr Akazawa has expressed hope that an agreement could be reached in June with the next round of negotiations taking place in late May. Most imported vehicles became subject to a 25 per cent US duty on April 3, while most auto parts become subject to that levy as of May 3. There are some executive orders that prevent duties from doubling up, but considering the US is the biggest market for Japan's five largest carmakers, even a moderately increase in tariffs will have an outsized impact on their bottom lines. The Trump administration reached its first trade deal on May 8 with the UK. But the US had a US$11.9 billion goods trade surplus with the UK last year, whereas it ran a US$68.5 billion deficit with Japan. That may make it more difficult to secure an agreement without significant concessions by one side. 'The hurdle is high for Japan to get auto tariffs lowered' on exports to the US, said Mr Hiroshi Namioka, chief strategist at T&D Asset Management Co. 'At the same time, the auto industry is too important for Japan to simply go along with what the US wants.' Some Japanese automakers have responded to the tough new trade environment by making changes to their global manufacturing footprints. Nissan Motor halted US orders for SUVs built in Mexico while Honda Motor is shifting production of the hybrid version of its Civic from Japan to the US. Due to retaliatory tariffs against the US, Mazda Motor is stopping exports to Canada of one model that is manufactured at an Alabama factory that is a joint venture with Toyota. 'We will maintain our current operations while continuing to focus on reducing fixed costs, all while keeping a close eye on the movements by US authorities, including customs duties,' a spokesperson for Toyota said in a statement. Japan production pledge Toyota has already invested heavily to build out its US operations – including spending US$13.9 billion on a new battery plant in North Carolina. But it also remains committed to maintaining its extensive domestic production base. Chairman Akio Toyoda has repeatedly pledged to keep making at least three million vehicles a year in Japan. Last year, the company built 3.1 million cars in its home country, about a third of its worldwide production total. Globally, Toyota sold 10.8 million cars in 2024, with the US accounting for a little less than a quarter of those. While half were made locally and another 30 per cent came from neighbouring Canada and Mexico, some 281,000 vehicles were imported from Japan. That includes popular models such as the 4Runner mid-sized SUV, Prius hybrid and several upscale Lexus vehicles. The company's bestsellers in the US – the RAV4 hybrid crossover and Corolla compact sedan – are assembled at factories in Kentucky and Mississippi. But gas-only RAV4s are imported from Canada and the plug-in hybrid comes from Japan. Corolla models variants like the sporty GR, practical hatchback and gas-electric hybrid also carry made-in-Japan labels. That exposure puts Toyota in the crosshairs of the Trump administration and means the automaker has a lot riding on the outcome of the US-Japan trade negotiations. The carmaker has quietly pushed back on the White House's critique, noting through a spokesman that it is committed to spend almost US$21 billion in the US just since 2020. That is nearly double the pledge it made during Mr Trump's first administration – after similarly coming under attack by the US president. Toyota also said has increased direct manufacturing employment in the US to 31,000 workers, up from 25,000 in 2016. One issue it faces: A severe restraint on flexibility at existing manufacturing facilities in the US, which could affect its ability to shift vehicles from overseas plants. Toyota's factory in Georgetown, Kentucky – the oldest and largest of its US vehicle-assembly operations – has no slack for new models. It was running full-tilt at nearly 100 per cent of its maximum capacity as of late April, according to a US-based representative for the company. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
