TOYOTA MOTOR CORPORATION

Business Details

Designs, manufactures and sells automobiles—including sedans, minivans, compact cars, SUVs, and trucks—and related parts and accessories. Domestically, vehicles are sold to customers through dealers nationwide; overseas, sales are conducted through sales companies such as Toyota Motor Sales, U.S.A., Inc. Manufacturing is handled by Hino Motors, Ltd. (deconsolidated effective April 1, 2026), Daihatsu Motor Co., Ltd., Toyota Auto Body Co., Ltd. and others, while DENSO Corporation and others supply parts. Vehicle sales volume for the fiscal year under review was 9,595 thousand units (up 2.5% year on year). Major markets are North America (30.6%), Japan (21.7%), Asia (18.3%) and Europe (12.3%).

Recent Overview

Sales volume increased, but a sharp rise in expenses and the impact of U.S. tariffs drove a 29.5% year-on-year decline in operating income.

In FY2026 (ending March 2026), Automotive segment operating revenue rose to ¥45,417,703 million (up 5.1% year on year), but operating income fell sharply to ¥2,777,049 million (down 29.5% year on year). The main causes were an increase in expenses (a negative impact of approximately ¥2,030.0 billion year on year company-wide) and the impact of U.S. tariff policy on operating income (a negative impact of ¥1,380.0 billion for the consolidated group as a whole for the period). North America recorded an operating loss of ¥192.5 billion. On the other hand, vehicle sales volume increased 2.5% year on year to 9,595 thousand units. As a subsequent event, effective April 1, 2026, Hino Motors, Ltd. was deconsolidated as a result of its business integration with Mitsubishi Fuso Truck & Bus Corporation. In addition, the sale of shares in Toyota Industries Corporation (via a squeeze-out procedure) is planned for the following fiscal year, and a review of capital relationships is underway.

Key Products

Growth Drivers

• Revenue growth effect from increased vehicle sales volume (9,595 thousand units in FY2026, up 2.5% year on year)
• Maintaining competitiveness through expanding hybrid vehicle demand and a full lineup strategy
• Profit contribution from sales efforts (a positive factor of ¥710.0 billion company-wide for the period)
• Strong sales in Asia and other regions (Latin America, Middle East, etc.) (operating income in other regions up 30.2% year on year)
• Continued R&D and capital investment (R&D expenses of ¥1,522.8 billion; capital expenditures of ¥2,453,641 million) driving the transformation into a mobility company
• Continued expansion of value chain revenue (parts and services)

Risks

• Significant negative impact on operating income from U.S. tariff policy (¥1,380.0 billion for the consolidated group as a whole for the period)
• Sharp increase in various expenses (rising personnel costs, R&D expenses, and capital-investment-related expenses significantly pressuring operating income)
• Operating loss in North America (a loss of ¥192.5 billion in FY2026, a deterioration of ¥301.3 billion year on year)
• Impact on the scope of consolidation and financial statements (currently being calculated) from the deconsolidation of Hino Motors, Ltd. (business integration with Mitsubishi Fuso, effective April 1, 2026)
• Foreign exchange risk (deterioration in earnings if the yen appreciates; the impact of exchange rate fluctuations for the period was a negative factor of ¥195.0 billion company-wide)
• Intensifying competition and demand volatility risk in the Chinese and Asian markets
• Rising raw material and parts prices (steel, non-ferrous metals, resins, etc.) making cost improvement more difficult (cost improvement efforts were a negative factor of ¥120.0 billion for the period)
• Impact on reliability and costs from certification and quality issues (Daihatsu Motor Co., Ltd. and others)
• Significant rise in the break-even sales volume (overlap of expanded investment in people and the future with the impact of U.S. tariffs)