Toyota’s operating income drops 27% in Q2

Core Insights - Toyota Motor Corporation reported an 8.2% increase in global revenues to JPY 12,377.4 billion in Q2 of FY26, but operating income fell by 27% to JPY 839.5 billion, leading to a decrease in operating margin from 10.1% to 6.8% year-over-year [1] - In the first half of FY26, global revenues rose by 5.7% to JPY 24,630.7 billion, with vehicle sales increasing by 5% to 4.783 million units, primarily driven by a 14% increase in North American sales [2] - Operating profits saw a significant decline, with a nearly 19% drop in the first half of FY26, attributed mainly to the impact of US import tariffs, resulting in a first-half operating margin decrease to 7.2% from 8.2% a year earlier [3] Financial Forecasts - Toyota slightly raised its full fiscal year (FY26) global revenue forecast to JPY 49.0 trillion from JPY 48.5 trillion, while maintaining its sales forecast for Toyota and Lexus at 9.8 million units [4] - The full-year operating income forecast was increased to JPY 3.4 trillion from JPY 3.2 trillion, and net income forecast was raised to JPY 2.93 trillion from JPY 2.66 trillion [4] - Consolidated retail sales, including Daihatsu and Hino subsidiaries, are now projected to reach 11.3 million units, up from the previous forecast of 11.2 million [5] Market Dynamics - Despite the challenges posed by US tariffs, strong demand supported by product competitiveness has led to increased sales volumes, particularly in Japan and North America [6] - The company emphasized its focus on improving productivity and increasing returns through comprehensive future investments [6]