Toyota Motor is expected to report a third straight decline in quarterly operating profit on Friday, as rising costs and U.S. import tariffs weigh on earnings despite record global vehicle sales and strong demand for hybrids.
The world’s best-selling automaker is forecast to post operating profit of 1.09 trillion yen ($6.95 billion) for the October-December quarter, down 10 per cent from a year earlier, the average estimate of seven analysts surveyed by LSEG showed.
The results, even with a decline, are still likely to demonstrate Toyota’s resilience in a market where global auto demand is not growing and manufacturers increasingly have to woo customers from rivals to lift earnings, analysts say.
“For the industry, we are not expecting any volume increase, so it means Toyota needs to gain share from competitors,” said James Hong, head of mobility research at Macquarie.
“They have a very strong hybrid product and well-managed inventory,” he said, describing the company as being in a “winning position”.
There is also scope for an upside surprise from the yen’s exchange rate, which has remained weaker than Toyota’s assumptions for the second half of the fiscal year.
Global sales of Toyota and Lexus vehicles rose nearly 4 per cent to a record 10.5 million in 2025. Performance was particularly strong in the United States, Toyota’s biggest market, where sales climbed 8 per cent as the company benefited from consumers shifting towards high-margin hybrid vehicles.
Sales in China were flat, while those in India jumped 17 per cent to more than 350,000 vehicles. Hybrids accounted for 42 per cent of Toyota and Lexus sales during the year, while battery electric vehicles made up less than 2 per cent.
The financial results report comes as Toyota faces wider investor scrutiny of its governance, highlighted by a recent pushback from activist investors over its bid to take affiliate Toyota Industries private.
Toyota raised its full-year profit forecast when it last reported results in November, citing higher sales volumes, a weaker yen and cost-cutting efforts. It currently expects operating profit of 3.4 trillion yen for the financial year ending in March.
Still, the automaker faces headwinds, including rising labour costs and raw material prices, as well as U.S. tariffs on imported vehicles, with those from Japan subject to a 15 per cent levy.
The yen remains a key swing factor. In November, Toyota said it forecast an exchange rate of 146 yen to the dollar and 169 yen to the euro for this fiscal year.
The currency has traded weaker than those levels recently , potentially offering some upside.>
