Toyota’s Results Impacted by Tariffs and $4.3bn Iran War Hit

Toyota recorded a ¥1.4tn (US$8.9bn) hit from tariffs in financial year 2025/26, as well as a projected negative ¥670bn (US$4.3bn) Middle East impact as a result of the Iran war for the current fiscal year. 

Despite this, the world's largest car maker posted record sales of 10,477,000 units across its Toyota and Lexus brands. 

Toyota's Accounting Group Chief Officer Takanori Azuma told shareholders that thanks to strong demand from customers, mainly in Japan and the US, vehicle sales increased.​​​​​​

Profits, tariffs and the Iran war

Azuma told shareholders that the impact of US tariffs amounted to negative US$8.9bn. 

Toyota is not the only car company hit by US President Donald Trump's tariff measures. Reuters reported in May of 2026 that Volkswagen's CEO, Oliver Blume, said that tariffs represent a burden of US$5.88bn per year to the German carmaker. 

Taking into account the Middle East impacts and other factors, Toyota is forecasting operating income for the fiscal year ending March 2027 of ¥3tn (US$19.4bn), representing a year-on-year decrease of ¥800bn (US$5.11bn). 

Its recorded operating income for financial year 2025/26 is ¥3.8tn (US$24.2bn), down ¥1tn (US$6.4bn) year on year. 

Toyota recorded a US$4.3bn hit from the Middle East conflict projected through to 2027. Azuma told shareholders negative factors such as foreign exchange fluctuations, higher R&D expenses, increased labour costs as well as materials cost inflation had affected the company. The company added this was partially offset by steady demand of hybrids. ​​​​​​

Electrified vehicles

Toyota's hybrid sales were particularly strong and the company recorded strong growth in battery electric vehicle (BEV) sales. 

Azuma told shareholders that hybrid electric vehicles (HEV) sales should exceed five million units for the first time this fiscal year, and total electrified vehicle sales are expected to reach approximately six million units. 

In its report, Toyota recorded a 168.4% increase in its BEV sales, representing 145,000 units in the financial year ending in 2026. The group forecasts 243,000 BEV sales this year. 

The company recorded 4,732,000 electrified sales, including HEVs, BEVs, hydrogen fuel cell vehicles and plug-in hybrid electric vehicles, up 106.5%. 

Chinese brands, such as BYD, are dominating the global EV market, with BYD overtaking Tesla earlier this year to become the world's top EV seller. 

Toyota, which has historically taken a cautious approach to battery electric vehicles, is also a key developer of hydrogen vehicles. The company recorded 1,000 units in hydrogen electric vehicle sales. 

Toyota's BEV production

In March 2026, Toyota announced that it had invested US$800m in a Kentucky plant to “prepare for production of battery electric vehicles”.

The investment was part of a larger US$1bn investment in US manufacturing at Kentucky and Indiana Plants.

As other carmakers are winding up EV investments, Toyota seems to be trying to position itself towards BEVs. 

Masahiro Akita, an analyst at Bernstein, told the Financial Times that: “We think 2026 is going to be the starting point for Toyota’s full electric shift.”