Reuters has reported that Toyota Motor and Honda Motor are expected to post weaker first-quarter earnings this week due to the impact of U.S. import tariffs and a stronger yen, despite continued strong demand for hybrid vehicles in their key overseas markets.
Japanese automakers are facing growing uncertainty in the U.S. market, where rising import tariffs are driving up vehicle prices. Investors are closely watching how the two largest Japanese car manufacturers will cope with these pressures.
Toyota, the world’s largest automaker, is expected to report a 31% year-on-year decline in operating profit to 902 billion yen (approximately 200 billion baht) this Thursday, which would mark its weakest quarterly performance in over two years.
Honda is expected to report a 36% drop in operating profit to 311.7 billion yen (around 68 billion baht) this Wednesday, marking the second consecutive quarter of profit decline. Honda had earlier projected a full-year profit decrease of up to 59%.
Both companies are facing the prospect of a 15% tariff on Japanese vehicle imports into the U.S., revised from a previous total of 27.5%, following a bilateral trade agreement reached last month. Other Japanese automakers and suppliers have also signaled weaker earnings, citing similar pressures from tariffs and the stronger yen compared to the same period last year.
“The first quarter will be a rough one for Toyota,” said Christopher Richter, auto analyst at CLSA. “But things should gradually improve in the following quarters,” he added, noting that some relief could come from lower import tariffs. In particular, Honda has become more dependent on the U.S. market in recent years, while sales in other regions have declined noticeably. Besides the U.S., both Toyota and Honda manufacture key models for the American market in Canada and Mexico.
For Honda, the U.S. accounted for about two-fifths of total sales in the first half of the year. Its global sales dropped 5% over the same period, driven by double-digit declines in China, Asia, and Europe.
In contrast, Toyota’s global sales rose 6% during the same timeframe, supported by strong demand for hybrid vehicles, which generally carry higher profit margins than conventional gasoline cars. Its Camry and Sienna hybrid models remain popular in the U.S. market. Toyota has also performed better in China in recent months, with sales up 7% year-on-year in the first half.
In May, Honda announced plans to reduce its investment in electric vehicles due to slowing demand, shifting its focus to updated hybrid models. It had previously delayed plans to build an EV production base in Canada for the same reason.
Investors are monitoring both companies for updates on their pricing strategies and any revisions to their full-year profit forecasts. CLSA noted that Japanese automakers have been employing various measures, such as transfer pricing, to help mitigate the impact of U.S. tariffs.
Toyota’s share price has dropped 16% so far this year, while Honda’s has remained steady.
Reuters has reported that Toyota Motor and Honda Motor are expected to post weaker first-quarter earnings this week due to the impact of U.S. import tariffs and a stronger yen, despite continued strong demand for hybrid vehicles in their key overseas markets.
Japanese automakers are facing growing uncertainty in the U.S. market, where rising import tariffs are driving up vehicle prices. Investors are closely watching how the two largest Japanese car manufacturers will cope with these pressures.
Toyota, the world’s largest automaker, is expected to report a 31% year-on-year decline in operating profit to 902 billion yen (approximately 200 billion baht) this Thursday, which would mark its weakest quarterly performance in over two years.
Honda is expected to report a 36% drop in operating profit to 311.7 billion yen (around 68 billion baht) this Wednesday, marking the second consecutive quarter of profit decline. Honda had earlier projected a full-year profit decrease of up to 59%.
Both companies are facing the prospect of a 15% tariff on Japanese vehicle imports into the U.S., revised from a previous total of 27.5%, following a bilateral trade agreement reached last month. Other Japanese automakers and suppliers have also signaled weaker earnings, citing similar pressures from tariffs and the stronger yen compared to the same period last year.
“The first quarter will be a rough one for Toyota,” said Christopher Richter, auto analyst at CLSA. “But things should gradually improve in the following quarters,” he added, noting that some relief could come from lower import tariffs. In particular, Honda has become more dependent on the U.S. market in recent years, while sales in other regions have declined noticeably. Besides the U.S., both Toyota and Honda manufacture key models for the American market in Canada and Mexico.
For Honda, the U.S. accounted for about two-fifths of total sales in the first half of the year. Its global sales dropped 5% over the same period, driven by double-digit declines in China, Asia, and Europe.
In contrast, Toyota’s global sales rose 6% during the same timeframe, supported by strong demand for hybrid vehicles, which generally carry higher profit margins than conventional gasoline cars. Its Camry and Sienna hybrid models remain popular in the U.S. market. Toyota has also performed better in China in recent months, with sales up 7% year-on-year in the first half.
In May, Honda announced plans to reduce its investment in electric vehicles due to slowing demand, shifting its focus to updated hybrid models. It had previously delayed plans to build an EV production base in Canada for the same reason.
Investors are monitoring both companies for updates on their pricing strategies and any revisions to their full-year profit forecasts. CLSA noted that Japanese automakers have been employing various measures, such as transfer pricing, to help mitigate the impact of U.S. tariffs.
Source: Reuters
