Revenue increased by 6.8%, net profit decreased by 26.1%! Toyota's performance report for the first three quarters of the 2026 fiscal year: selling more, earning less

Recently, Toyota Motor Corporation (hereinafter referred to as Toyota) announced its financial data for the first three quarters of fiscal year 2026 (April to December 2025). The report shows that from April to December 2025, Toyota’s global sales reached 7.302 million units, a year-over-year increase of 4.3%. Operating revenue was approximately 38.09 trillion yen, an increase of about 2.41 trillion yen compared to the same period in fiscal year 2025, representing a 6.8% year-over-year growth.

During the same period, Toyota’s operating profit was about 3.2 trillion yen, down 13.1% year-over-year; net profit was approximately 3.03 trillion yen, a decrease of about 1.07 trillion yen from the same period in fiscal year 2025, a decline of 26.1% year-over-year. Combining this with Toyota’s previously announced net profit of approximately 665.6 billion yen for January to March 2025, the total profit for the entire 2025 calendar year is roughly 3.695 trillion yen (about 164.9 billion RMB).

In the Chinese market, during the first three quarters of fiscal year 2026, Toyota’s consolidated subsidiaries in China achieved an operating profit of approximately 138.6 billion yen, an increase of about 13.2 billion yen compared to the same period in fiscal year 2025, a year-over-year growth of approximately 10.5%. During the same period, Toyota’s investment income from joint ventures and affiliated companies in China calculated on the equity method was about 75.2 billion yen, an increase of approximately 6.5 billion yen from the previous year, a 9.6% year-over-year growth.

In terms of sales, during the first three quarters of fiscal year 2026, Toyota and Lexus combined sold 8.02 million units, a 3.4% increase. If extended to the entire 2025 calendar year, Toyota (including Lexus) achieved a global sales volume of 9.662 million units, surpassing Volkswagen’s 8.98 million units, marking the sixth consecutive year Toyota has led global auto sales.

However, when focusing on the latest quarterly financial report, a hint of “chill” on the profit side begins to emerge. During the first three quarters of fiscal year 2026, Toyota’s operating profit decreased by 13.1% year-over-year, and net profit fell by 26.1%. Despite continued growth in sales and revenue, why has the profit engine suddenly started to “stall”?

According to observations by the Daily Economic News reporter, this is not caused by a single market but may be due to issues in its two core profit engines simultaneously. On one hand, North America, which has been a significant pillar of Toyota’s global profit, recorded an operating loss of about 5.6 billion yen from April to December 2025. On the other hand, data shows that Asia was the only region with a decline in sales during the same period, with Toyota’s sales in Asia reaching 1.325 million units, a decrease of 53,000 units year-over-year. Operating revenue (excluding valuation gains and losses from interest rate swaps) decreased by about 35.3 billion yen, down to approximately 645.4 billion yen. Japan remains Toyota’s largest profit source, contributing about 1.8 trillion yen in operating profit during the first three quarters of fiscal year 2026.

Of course, the Chinese market also presents a major challenge. Data from the China Association of Automobile Manufacturers shows that from 2022 to 2025, the market share of Chinese brands surged significantly from 45.9% to 69.5%. Correspondingly, the share of Japanese brands fell from around 20% to less than 10%, a decline of over 10%.

Notably, despite the operating losses in North America and the sales decline in Asia, Toyota has raised its operating profit forecast for the current fiscal year (April 2025 to March 2026) from about 3.4 trillion yen to approximately 3.8 trillion yen, an increase of nearly 12%. This seemingly contradictory optimistic decision mainly stems from solid progress in cost control, financial services, and product strategies.

In response to external market pressures, Toyota has launched a comprehensive “lower break-even point” plan across the group. The financial report shows that through measures such as cost reduction, the company achieved an operating improvement of about 900 billion yen, effectively offsetting some external shocks. Meanwhile, during the reporting period, Toyota Financial Services’ operating revenue increased by 36.7 billion yen to 556.9 billion yen; when including related valuation changes, operating revenue reached 663.3 billion yen, further consolidating its position as a stable profit pillar.

Additionally, Toyota’s persistent “multi-path” electrification strategy is receiving positive market responses. Thanks to strong demand for hybrid models in key markets like North America and China, the share of electrified vehicles has risen to 46.9%. Among these, hybrid vehicles account for as much as 92%, while pure electric vehicles, though still a small base (4.4%), grew by 149.8%, indicating potential in multiple segments.

In the previous Q2 FY2026 earnings call, Toyota executives stated they would continue increasing R&D investment in electrification, focusing on solid-state batteries, pure electric platforms, and intelligent driving. Meanwhile, for the Chinese market, aligned with medium- and long-term capacity goals, Toyota plans to increase its vehicle production in China to at least 2.5 million units annually by 2030.

Industry analysts believe that, in the face of current trends in intelligentization and global automotive market fluctuations, how Toyota can maintain its global scale advantage while repairing its profit engines and successfully navigating the deep waters of technological transformation will be the most important focus in its next financial reports.