Toyota to face profit squeeze in 2026 as tariffs bite and North America slows

According to Visible Alpha consensus, Toyota Motor (TSE: 7203) is expected to see a steep -35% year-over-year net income decline in fiscal 2026 amid tariffs, as the Japanese carmaker grapples with rising US tariffs and a potential increase in supply chain costs. The outlook marks a reversal from recent momentum and introduces a layer of uncertainty with analysts expecting total revenue to slowdown by +0.2% to JP¥48.1 trillion.

Regionally, North America is expected to see the sharpest revenue pullback. After peaking at JP¥19.3 trillion in 2025—buoyed by robust hybrid sales and easing supply bottlenecks—revenue from the region is forecast to contract -3.9% year-over-year in 2026.

In contrast, Toyota’s domestic market is expected to remain relatively resilient, with revenue in Japan projected to decline marginally by -0.9% to JP¥21.7 trillion. This modest dip is buffered by stable demand and strong consumer preference for hybrid models, which continue to support sales amid broader market softness. Europe is expected to deliver +8% growth, supported by tightening emissions regulations and continued traction for Toyota’s low-emissions fleet. Revenues from Asia ex-Japan is also forecast to rise by +3%.

Despite a projected +3.7% increase in global vehicle production to 9.4 million units in 2026—driven by restocking efforts in Japan (+8% YOY) and Europe (+9% YOY)—sales volumes are expected to lag, rising just +3.1%. North America, Toyota’s largest market by unit sales is forecast to see deliveries decline by -0.9%.

Meanwhile, unit sales are expected to increase modestly across Japan (+4.0% YOY), Europe (+6.6%), and Asia ex-Japan (+4.5%), reflecting stronger demand fundamentals outside the US.