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

Toyota's executive Kenta Kon pledged to bolster the automaker's earnings amid challenges stemming from US tariffs and the ongoing Iran conflict. Speaking to media organizations, Kon expressed the desire to reverse a trend where the break-even volume had become slightly high. The company anticipates its operating profit margin to decline to 6.3% in the fiscal year ending March 2027, down from 7.4% the previous year.

The decrease in profit margin is attributed to higher US tariffs on cars and parts, as well as a rise in oil prices due to the US-Israel war on Iran, which offset the positive impact of the weaker yen.

In response to the cost pressures, Toyota plans to streamline its production by reducing the number of part types. This reduction is expected to optimize plant space utilization and enhance productivity. Kon emphasized that workspaces are where Toyota generates value and earns revenue, highlighting the need for continuous improvement in this area.

The company is also set to incorporate artificial intelligence and more robots into its production processes, while simultaneously ensuring that human workers play an even more crucial role. Kon stated that the value of what only people can do will increase in the future.

As Toyota pivots from being solely an automaker to a mobility company, Kon underscored the company's commitment to developing innovative technologies such as flying cars and autonomous driving systems. Kon expressed Toyota's vision to create a world where people can move more easily, signaling the company's broader strategic shift beyond traditional automotive manufacturing.