The world’s largest car manufacturer has suffered a multibillion-dollar loss as a result of the war in Iran.
And that is just the start of Toyota’s financial pain, according to the company itself.
The Japanese car giant reported a 670 billion yen ($5.9 billion) hit to profits in the Japanese fiscal year (April 2025 – March 2026) due to soaring costs for parts and materials and low vehicle sales in the Middle East.
“We are gravely assessing the situation because one cause was our slowness in changing the operational structure from a mid to long-term perspective and failing to plant the seeds for future growth,” Executive Vice President Yoichi Miyazaki said.
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Inflated materials prices cost the brand an additional $3.5 billion, while it lost $2.3 billion in dropped sales.
According to Reuters, Toyota’s Chief Accounting Officer, Takanori Azuma, said the impact of the Iran war is being felt in various areas, including fuel costs, transportation expenses, and the prices of paint and other materials used in vehicle assembly plants.
“We do not believe we can fully offset the negative 670 billion yen Middle East impact,” Azuma said.
Japan imports roughly 70 per cent of its aluminium from the Middle East.
And along with higher oil and fuel prices, the cost of tyres has also been impacted.
According to the Trump administration, a deal to open the Strait of Hormuz is on the table, and it is up to Iranian officials to accept it.
TOYOTA TO COP MASSIVE PROFIT FALL
Toyota Motor Corp does not see the situation in the Middle East, particularly the blockade of the Strait of Hormuz, easing anytime soon.
As a result, the Japanese company expects its net profit for fiscal 2026 to fall by 22 per cent to 3 trillion yen ($26.3 billion).
Profits will be hit by an expected continued decline in sales of more profitable vehicles that are popular in the Middle East.
Despite this, sales of hybrid vehicles have been strong in other parts of the world.
In Australia, Toyota still dominates the market, accounting for close to one in six new vehicles sold in April.
The brand still leads as the best-selling manufacturer and with new RAV4 and HiLux ute models making their way into Australia.
It is expected to continue its dominance here.
Toyota Australia raised its 2026 sales forecast to more than 210,000, a figure no automotive brand has ever hit in Australia.
Originally, the brand forecasted to exceed 200,000 sales.
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Toyota sold 16,574 vehicles in March, bringing year‑to‑date deliveries to more than 44,000 vehicles.
Toyota Australia Vice President Sales, John Pappas, said the company is entering the second quarter with strong momentum.
“Earlier this year, we forecast exceeding 200,000 sales in 2026. With the demand we are seeing and the increased supply coming, we now expect to exceed 210,000 sales – a milestone no other automotive brand has achieved in Australia,” Pappas said.
