Toyota cuts profit estimates due to tariffs

Japan's leading carmaker Toyota posted record sales for the fiscal year ending in March, but profits in the final quarter fell, partly due to a certification scandal. Toyota Motor Corp.'s net profit in the January-March period was ¥664.6 billion ($4.6 billion), down from ¥997.6 billion in the same period a year earlier. Quarterly sales reached ¥12.36 trillion ($85.9 billion), up from ¥11 trillion a year earlier.

Toyota has strengthened the testing system of its vehicles after admitting large-scale fraud, including the use of inadequate or outdated data in crash tests, incorrect testing of airbag inflators and engine power controls. Akio Toyoda, president of Toyota and grandson of the carmaker's founder, issued an apology. The irregularities did not compromise the safety of vehicles already on the road, including the popular Corolla hatchback and Lexus luxury cars. But the scandal was a major embarrassment for a manufacturer whose brand has been synonymous with quality and attention to detail for decades.

For the fiscal year ending in March, Toyota reported a profit of ¥4.77 trillion ($33 billion), down from ¥4.94 trillion in the previous fiscal year. Annual sales reached a record 48 trillion yen ($333.6 billion), up from 45 trillion yen. Toyota forecasts sales of 48.5 trillion yen ($337 billion) for the fiscal year ending March 2026. The profit forecasts are less optimistic, citing costs to meet carbon neutrality requirements, as well as the impact of President Donald Trump's US tariffs on operating income, which Toyota says has been tentatively estimated at ¥180 billion ($1.3 billion). This estimate covers April and May, which means it could increase in the coming months.

Consolidated vehicle sales for the fiscal year ending in March totalled 9.36 million vehicles, down slightly from 9.44 million in the previous fiscal year. According to Toyota officials, cost-cutting and marketing efforts worked as a counterbalance to the downsides, including the interruption of production in the United States for several months due to quality problems. Toyota also stated that the quota of electric vehicles sold is steadily growing. Toyota has sometimes been criticised for lagging behind in the global transition to electric vehicles, partly because it has a wide range of other types of environmentally friendly cars, including hybrid vehicles.