Toyota hits sales records, profits hit by Iran war and tariffs

Toyota Motor Corporation achieved record annual sales of 50.68 trillion yen (AUD$544 billion) for the year ending March, making it the first Japanese company to exceed this milestone, despite net profit falling 19.2% due to geopolitical pressures.

The world’s largest automaker reported sales growth of 5.5% from the previous year, driven by strong demand for hybrid vehicles and price revisions across major markets. However, net profit dropped to 3.85 trillion yen (AUD$41.3 billion), while operating profit fell 21.5%.

The company’s financial performance was significantly impacted by higher US tariffs and the ongoing Iran war, with Toyota reporting a combined hit of 1.38 trillion yen (AUD$14.8 billion) from tariff impacts alone.

Iran war creates US$4.3 billion headwind

Toyota expects the effects of the Iran war to cost approximately US$4.3 billion (670 billion yen) in the current financial year, representing one of the most significant warnings by a global company regarding the conflict’s broader economic impact.

Chief Accounting Officer Takanori Azuma said the war’s impact extends across multiple cost areas. “The impact of the Iran war is being felt in everything from fuel costs, transportation expenses, and the cost of paint and other materials used at vehicle assembly plants,” Azuma said.

The bulk of the financial hit stems from higher material costs, with the remainder attributed to delivery delays and lower sales volumes. Japan imports roughly 70% of its aluminium from the Middle East, making Toyota particularly vulnerable to supply chain disruptions.

Vehicle sales maintain momentum

Despite cost pressures, Toyota Group vehicle sales rose 2.5% to 11.28 million units, supported by solid demand in major markets including Japan. The company’s hybrid vehicle segment showed particular strength, with sales expected to exceed 5 million units for the first time this year.

Battery electric vehicle sales are projected to grow by almost two-and-a-half times, with expansion plans focused on China, Europe and North America.

CEO maintains growth focus

Toyota president and chief executive Kenta Kon, leading the company through his first full financial year, emphasised the organisation’s capacity for continued investment despite headwinds.

“The upward trend in the break-even sales volume has yet to show signs of slowing,” Kon said. “We remain in a position to step on the accelerator, meaning we’re still able to keep investing steadily in growth. Rather than hitting the brakes, we believe the earnings put us in a position to identify areas of waste and change and transform our structure step by step.”

For the current business year through March 2027, Toyota projects net profit will fall 22% due partly to the Middle East conflict impact, with sales rising 0.6%. Operating profit is predicted to drop 20.3%.

The group forecasts worldwide sales of 11.18 million units in 2026/27, down 0.9% from the previous year.

Australian market strength continues

Toyota’s global challenges contrast with its strong performance in Australia, where the brand continues to dominate the new vehicle market. The company accounts for close to one in six new vehicles sold, maintaining its position as Australia’s leading automotive manufacturer.

Toyota Australia has raised its 2026 sales forecast to more than 210,000 units, a figure no automotive brand has previously achieved in the Australian market. Popular models including the RAV4 and HiLux continue to drive local sales momentum, with new variants expected to reinforce Toyota’s market leadership position.