Toyota raised its full-year profit forecasts on Thursday on the back of strong demand for hybrid vehicles and the weak yen, despite fierce competition from Chinese rivals. For the current year to March 31, 2027, the firm said it expected net profit of ¥3.57 trillion ($22.6 billion), up from its previous projection in August of ¥3.25 trillion. However the forecast still foresees a year-on-year decline in profit of 7.2%.
Sales remained “resilient,” driven by hybrid vehicles, particularly in the United States, the company said, as well as the weakening of the yen, which this summer fell to its lowest level in four decades. Although the forecast came in below the expectations of analysts surveyed by Bloomberg, Toyota’s share price soared by more than 15% in the wake of the announcement. The company also predicted operating profit of ¥3.9 trillion, compared with its earlier forecast of ¥3.4 trillion.
The world’s largest automaker by sales said the decision came after it “mitigated the impact of rising materials prices and production disruptions caused by earthquakes and floods through recovery efforts at production sites and optimized global supply, thereby maintaining consolidated vehicle sales.” The hike in forecasts overshadowed a lackluster second quarter, which saw Toyota’s net profit slump 18.5% year-on-year to ¥759.4 billion, well short of expectations, still weighed down by more expensive materials and other factors. Its quarterly revenue, by contrast, jumped 8.6% year-on-year to ¥13.4 trillion, thanks to an increase in unit sales in Japan and Europe and stabilization in North America, despite tariffs imposed by Washington. For the full 2026-2027 fiscal year, which will end in late March, Toyota expects revenue to grow 5.6% year-on-year to ¥53.5 trillion, a figure it slightly revised downward on Thursday.
The automaker acknowledged a “challenging competitive environment.” This is especially true in China, where Toyota again saw its unit sales plunge 23% year-on-year in August. The yen has weakened because of the gap between Japanese and U.S. interest rates, high oil prices and concerns that Prime Minister Sanae Takaichi’s spending plans will further swell Japan’s enormous debts. The weak currency has in recent months inflated resource-poor Japan’s import costs, especially for oil as the Iran war strangles supplies from the Middle East.
While a weaker currency also boosts Japanese exporters’ profitability, the country’s automakers are being squeezed by U.S. tariffs, the Middle East war and fierce competition from Chinese rivals. In July Chinese electric vehicle giant BYD challenged Toyota, Nissan and Suzuki on their home turf, launching a pint-sized kei car in Japan.
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