Toyota aims to bolster ‘earning power’ amid tariff, Iran war headwinds

Toyota's chief executive Kenta Kon pledged to enhance the company's earning power as the automotive industry grapples with challenges from US tariffs and the ongoing conflict in the Middle East, according to Kyodo News. Kon stated that they aim to reverse the current situation during a recent media meeting. Toyota anticipates its operating profit margin to decrease to 6.3% in the fiscal year through March 2027, down from 7.4% in the previous year, when it declined for the second straight year.

The margin was 11.9% in the year ending March 2024. Higher US tariffs on vehicles and components, coupled with soaring oil product prices due to the US-Israel war in Iran, have put a strain on profits, offsetting the positive impact of a weaker yen. To cut costs, Toyota plans to streamline its product range, thereby optimizing plant space and boosting productivity.

Kon believes that factories are where Toyota generates value and revenue, noting there is ample room for improvement. The automaker, renowned for its lean production system based on the just-in-time principle, intends to leverage artificial intelligence and additional robots in manufacturing. However, Kon emphasized that humans will assume an even more pivotal role, as the value of human capabilities will rise.

As part of its transformation from a traditional automaker to a mobility company, Toyota will also concentrate on developing flying cars and autonomous driving technologies. Kon expressed the company's commitment to creating a world where mobility is more accessible for everyone.