Toyota has reported a significant financial impact from the war in Iran, with costs reaching £3 billion due to rising material prices and declining sales. The world's largest automaker announced that profits declined in its fiscal year ending March 2026, marking one of the most substantial warnings yet about the conflict's effect on global businesses.
Key Takeaways
Toyota has reported a £3bn financial hit due to the war in Iran, driven by soaring material costs and declining sales. The company expects profits to fall for the third consecutive year.
- Toyota faces £3bn impact from Iran war, including £1.9bn rise in materials costs
- Operating profit drops to ¥3.8tn (£20bn) for fiscal year ending March 2026
- US tariffs cost Toyota an additional ¥1.4tn ($9 trillion)
- Middle East crisis disrupts supply chains and increases fuel expenses
- Toyota forecasts operating income of £14bn for the coming year, a decline of over 25%
According to The Guardian, Toyota experienced a £1.9 billion increase in material costs linked to the war and lost an additional ¥270bn (£1.3bn) from lower sales. The company's operating profits dropped to ¥3.8 trillion for the year, with US President Donald Trump’s tariffs contributing an additional cost of ¥1.4tn ($9 trillion).
The closure of the Strait of Hormuz and increased oil prices have disrupted global supply chains, particularly affecting Asian manufacturers heavily reliant on exports from the Gulf. Toyota's chief accounting officer, Takanori Azuma, stated that the company does not believe it can fully offset the negative impact of £4 billion from the Middle East crisis.
Toyota expects its operating income for the coming year to be ¥3 trillion (£14bn), a decline of more than 25%. The automaker's sales reached 9.6 million cars during the year, with hybrid vehicles accounting for half of those sales. Despite focusing on hybrids, Toyota only sold 600,000 battery-powered cars, though this was double the previous year's figure.
New CEO Kenta Kon faces the challenge of navigating these economic pressures while dealing with US tariffs and competition from Chinese carmakers. The outlook for the coming fiscal year is well below analyst forecasts, highlighting the severe impact of geopolitical tensions on global automotive markets.
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