Japanese automaker Toyota has announced a decline in its annual net profit and is adopting a cautious outlook for the coming months, amid soaring costs and geopolitical tensions in the Middle East. The world's leading car manufacturer even anticipates a nearly 35% drop in its net profit for the 2025-2026 fiscal year.
The group specifically points to the impact of the American tariffs imposed by Donald Trumpbut also the rise in raw material and oil prices caused by regional tensions. Toyota already estimates the cost of the new US tariffs on imported vehicles and parts at several hundred billion yen.
The Middle East is weakening sales and logistics
Toyota also acknowledges that the conflict in the Middle East is severely disrupting its operations. The group's sales in the region plummeted by nearly a third in March, and several logistics routes are affected by tensions around the Strait of Hormuz, a strategic artery for global trade.
The Japanese manufacturer has also reduced its production for the Middle East by approximately 40,000 vehicles, according to the Japanese business press. Land Cruiser models, particularly popular in the region, are among those most affected.
However, with continued strong demand for hybrid models, Toyota expects its margins to continue to deteriorate due to cost inflation, rising supplier wages, and disruptions in global trade.
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