Toyota Motor is expected to report a decline in operating profit for the October-December quarter, marking a third consecutive quarterly fall even as the automaker achieved record global vehicle deliveries and strong demand for hybrid models.
Analysts surveyed by LSEG put the consensus operating profit for the October-December quarter at 1.09 trillion yen, a decrease of about 10% from the same period a year earlier. The anticipated fall in quarterly profit comes amid a backdrop of rising labour and raw material costs and U.S. import tariffs on vehicles from Japan, which are subject to a 15% levy.
Market observers say the figures, while showing a decline, still demonstrate Toyota’s ability to perform in an industry where overall global automotive demand is not expanding and competition for market share is sharpening. James Hong, head of mobility research at Macquarie, noted that with no expected industry volume growth, Toyota will need to take share from rivals. He highlighted Toyota’s strong hybrid product range and well-managed inventory as factors that place the company in a favourable position.
Sales performance in the fiscal year was notable. Global deliveries of Toyota and Lexus vehicles rose nearly 4% to a record 10.5 million in 2025. The United States - Toyota’s largest market - saw particularly strong growth with sales up 8%, as consumers shifted toward higher-margin hybrid vehicles. Sales in China were flat, while India recorded a 17% increase to more than 350,000 vehicles. Hybrid vehicles accounted for 42% of Toyota and Lexus sales during the year, while battery electric vehicles made up less than 2% of sales.
Currency movements remain a significant swing factor for Toyota’s results. The company previously set exchange rate assumptions for the fiscal year at 146 yen to the dollar and 169 yen to the euro. The yen has traded weaker than those assumptions recently, and that relative weakness could provide upside to earnings versus Toyota’s internal forecasts. At the time of the report, the dollar was quoted at 156.8800 yen.
In November, Toyota raised its full-year operating profit forecast, citing higher sales volumes, a weaker yen and cost-cutting measures. The company currently expects operating profit of 3.4 trillion yen for the financial year ending in March.
Still, the automaker faces several ongoing headwinds. Rising labour costs and increases in raw material prices put pressure on margins, and U.S. tariffs on imported vehicles remain a drag on profitability. The corporate governance spotlight has also intensified, with investor scrutiny highlighted by pushback from activist investors over Toyota’s bid to take affiliate Toyota Industries private.
Analysts say there is potential for an upside surprise from currency movements, given the yen’s recent weakness relative to Toyota’s fiscal year exchange-rate assumptions. But near-term profit performance will depend on how effectively the company can manage cost inflation, navigate tariff impacts and continue to capture share in markets where volumes are not growing overall.
Sectors impacted - Autos and automotive suppliers, currency-sensitive exporters, and markets exposed to U.S. import tariffs.