Toyota Motor Q4 2025 Earnings Call Transcript

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Provided by Quartr
May 8, 2025
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Moderator

Ladies and gentlemen, thank you very much for coming despite your busy schedules. Let us now start the financial results meeting for the year ending March 2025. I will be the moderator for today. My name is Irie from the, Public Relations department. Now from EVP and Chief Financial Officer, Yoichi Miyazaki will give you the outline of the financial results.

Moderator

I'm Miyazaki, CFO. I would like to express our heartfelt position to our customers around the world who chose us as well as shareholders, dealers and suppliers who support us. So first, I would like to tell you the summary. Our operating income for the fiscal year ended March 2025 was 4,800,000,000,000.0 yen This high level of operating income was secured through the effects of price revisions and expansion of value chain profits while advancing comprehensive investments that led to the future and reinforcing our operating foundation. The operating income forecast for the fiscal year ending March 2020, '60 '3 point '8 trillion yen we plan to reap the benefits of our efforts to reinforce our operational foundation while continuing comprehensive investments from a mid- to long term perspective as well as strengthening our management foundation in developing new pillars of future profits.

Moderator

With regard to the impact of The U. S. Tariff, only the estimated impact of April and May 2025 have tentatively been factored in. As for shareholder returns, the full year dividend for the fiscal year ended March 2025 is JPY 90, an increase of JPY 15 compared to the previous fiscal year. The forecast full year dividend for fiscal year ending March 2026 will be increased by JPY 5 compared to the previous year, reaching JPY 95.

Moderator

Even in the face of a decline in profits, we will continue efforts to maintain a policy of stable dividend increase that reward our long term shareholders. From here, let me explain the details of the results for the fiscal year ended March 25. Consolidated vehicle sales for this fiscal year was 9,362,000 units, which was 99.1% of consolidated vehicle sales for previous fiscal year. Toyota Lexus vehicle sales was 10,274,000 units, which was 99.7% of such sales for the previous fiscal year due to supply constraints caused by the certification issue and other factors. The proportion of electrified vehicle was 46.2%, a significant increase from previous fiscal year, mainly led by HEVs, which were increased by 850,000 units from previous year.

Moderator

Consolidated financial results were sales revenues of 48,360,700,000,000.0, operating income JPY 4,795,500,000,000.0. Income before income tax of 6,414,500,000,000.0 yen and net income, 765,000,004,000. I would like to explain the factors which impacted operating income year on year. From FY 2024 results of 5,352,900,000,000.0000 yen we exclude JPY 352,900,000,000.0 of onetime favorable effects, which was attributable to market conditions and other factors and JPY 700,000,000,000 for the comprehensive investments, resulting in the forecast of JPY 300,000,000,000 at the beginning of FY twenty twenty five. Although there was impact from volume decline and motor mix deterioration due to the suspension production at Toyota Motor Manufacturing in The U.

Moderator

S, the profit amounted to JPY $47,955,000,000,000 due to the improvement of earning power through price revisions, controlling incentives and expansion of value chain profits. We believe that the major achievement was JPY $510,000,000,000 output of cost reduction efforts and marketing efforts while steadily reaping the benefits of comprehensive investment and the reinforcement of operational foundation for the future, such as restoring the production pace to the current cruising speed of 10,000,000 units. So this slide shows operating income by geographical region. Japan continued to maintain a high level of profit despite an increase in expenses due to the strengthening of the supplier base. In North America, operating income decreased due to the factors such as the impact of lower production volume caused by the four month shutdown of Toyota Motor Manufacturers in Indiana and U.

Moderator

S. A. Due to the quality issues. Asia and other regions recorded higher profits due to price revisions and other factors. Operating income of consolidated subsidiaries and share profit of investment accounted for using the equity method in China decreased mainly due to an increase in sales expenses.

Moderator

Operating income in the Financial Services business increased largely due to the increase in loan balances. Next, I will explain the forecast for the fiscal year ending March 31.

Moderator

Consolidated vehicle sales is expected to be 9,800,000 units, which is 104.7 of the previous fiscal year. Toyota and Lexus vehicle sales are expected to reach 10,400,000 units or 101.2% of the previous fiscal year due to the recovery in production volume. Electrified vehicle sales is expected to be a total of 5,184,000 units or 49.8% of total sales. Now let me explain the full year consolidated financial forecast. We have adopted the full year foreign exchange rate assumptions of JPY145 per U.

Moderator

S. Dollar and JPY160 per euro. Based on this, our forecast for the full year are sales revenue of 48,500,000,000,000.0 yen operating income of 3,800,000,000,000.0 yen income before income taxes of 4,410,000,000,000.00 yen and net income of 3,100,000,000,000.0. Next are the factors which impacted operating income forecast year on year. A JPY 400,000,000,000 increase due to the elimination of onetime expenses related to Hino Motors, a JPY $745,000,000,000 decrease due to the impact of foreign exchange rates.

Moderator

The impact of material prices is JPY $350,000,000,000. With regard to the impact of U. S. Tariffs, only the estimated impact in April and May 2025, yen '1 hundred and '80 billion has been tentatively factored in. Regarding comprehensive investment, we have added $470,000,000,000 yen We will steadily strengthen our management foundation as necessary and develop new pillars of future profit to realize sustainable growth from a mid to long term perspective and transformation into a mobility company.

Moderator

Additionally, as in the previous year, we expect to reap some of the benefits of comprehensive investment and achieve an improvement of JPY 3 and 49,500,000,000.0 factors such as increased sales volume, cost reduction efforts and expansion of value chain profits. As a result, the current forecast is 3,800,000,000,000.0 yen but we will use this as a starting point for future improvements. I will explain Toyota's profit structure. In the past, as a result of pursuing a management style focused on quantitative targets, we faced an extremely severe situation during the two thousand and nine Lehman shock, where we fell into a deficit of JPY461 billion and we're left with only JPY1.5 trillion in cash on hand. Subsequently, we rebuilt our financial base mainly by improving our breakeven volume so that we can continue to survive under any circumstances.

Moderator

As a result, we have been able to consistently achieve an ROE of over 10% after further learning and making improvements during the COVID-nineteen pandemic. Additionally, we have significantly improved profitability, increasing the marginal profit per unit by approximately 1.6 times. And the first driving force behind this improvement was product and region centered management. We have been developing ever better cars tailored to each region, expanded the Toyota and Lexus lineup and nurtured GR as a new brand. And this has allowed us to increase the average unit price, reduce incentives and carefully sell each ever better car.

Moderator

The second driving force was the implementation of Toyota's strength, TPS, Toyota Production System and cost reduction efforts. Since the COVID-nineteen pandemic, we have returned a cumulative 3,700,000,000,000.0 yen on a non consolidated basis to suppliers, while working together with the stakeholders to further enhance our cost competitiveness. We believe that these efforts are reflected in the results of the fiscal year ended March 2025 as explained at the beginning of this meeting. Another newly emerging presence that is becoming a pillar of our financial foundation is the value chain. The bar chart shows operating income by business.

Moderator

Compared to the fluctuating profits from new vehicles, value chain profits such as those from parts and finance has been steadily expanding at a pace of JPY150 billion annually over the past several years. The full year forecast shows that it will expand to more than JPY2 trillion. We plan to further enhance the value of our 150,000,000 units in operations, which is our strength through expanding maintenance services, strengthening our connection with finance and insurance by connected technologies as well as expanding the used car business and accessories business. In addition to this, we will also leverage software defined vehicles and expand profit from new products and services created by working together with outside partners in woven cities. And this long term stable financial foundation is the base of our group vision, inventing our path forward together.

Moderator

As a result of these efforts, we intend to expand and stabilize earnings, especially in the asset business, which is less susceptible to market and economic conditions and achieve a business structure that allows us to reduce the amount of capital required to prepare for profit fluctuations. On top of that, we intend to increase the flexibility of our capital policy, focusing on returns to shareholders, including such things as further acceleration of stable dividend increases. And ROE of 20 was set as an indicator to measure the progress of this transformation of our business structure and capital structure towards a mobility company. The next section explains shareholder returns. Our dividend policy is to increase dividends in a stable and continuous in order to reward our long term shareholders.

Moderator

Despite a decrease in profit for the fiscal year ended March 2025, we have decided to pay a full year dividend of JPY 90, an increase of JPY 15 from the previous fiscal year as announced. For the fiscal year ended March 2026, despite the difficulties in anticipating the business outlook due to the impact of U. S. Tariff impacts and other factors, the full year dividend forecast is JPY 95 per share, an increase of JPY 5 from the previous fiscal year. I have we have not set year end share repurchase budget.

Moderator

However, depending on the stock price level and other factors and the need to respond to requests to sell our shares, we will continue to flexibly implement share repurchases in the future. Lastly, Toyota alone cannot achieve structural reform of our business going forward. We will work together with our stakeholders with their support. This concludes my explanation of the financial results. Thank you very much.

Moderator

Now I'd like to introduce the CEO and President, Sato, to present.

Moderator

Hello, everyone. This is Sato speaking. In the last fiscal year, we were able to deliver many vehicles to customers by demonstrating our on-site capabilities even as certification issues, recalls and disasters continue to impact production. I would like to express the company's sincere gratitude to our Toyota, Lexus and GR customers the Facing various challenges over the past year, the entire company has reaffirmed the importance of Toyota's starting point of carefully making and delivering quality cars.

Moderator

We will continue to build each car with careful attention to safety and quality to demonstrate gratitude to our customers and all our stakeholders through our actions. Currently, the environment surrounding the automobile industry, including trade relations is extremely flux. At a time when changes are rapid and the future is unclear, we believe that we must continue to pursue making good cars without wavering from our principles of product centered management and striving to be the best in town. We will continue to establish development and production systems tailored to each region so that we can respond to the needs of our customers from up close and deliver cars on time. Also in order to flexibly respond to environmental changes, we want to firmly maintain and enhance our earning power.

Moderator

In particular, reducing costs in mass vehicle production is an exercise not only increasing current earning power, but also in learning fundamental manufacturing principles and in continuing the evolution of technologies. Toyota's competitiveness spawns from workplaces that pursue productivity and in which members think and act independently. To further strengthen this foundation, this year, we will continue to focus on advancing our initiatives for strengthening our operational base. We will do this by creating environments in which we can demonstrate our on-site capabilities for supporting the production of 10,000,000 cars and our ability to continue taking on diverse challenges for the future. When we first began strengthening our foundations, we were very thorough about safety and equality and followed proper work practices.

Moderator

Our initiatives focused on regaining fundamental car making strength and extra capacity for taking on challenges, which I think were efforts to stop the bleeding, so to speak. However, these efforts are now shifting to initiatives aimed at sowing seeds for the future. Preventing recurrence of the certification issues has becoming an opportunity to accelerate workplace rooted improvements, leading to initiatives to strengthen our company's foundation, including its workplace culture. In the voluntary TPS Jishuken for certification work initiative established by Chairman Toyota, improvement activities for addressing essential issues are making progress by identifying waste and bottlenecks throughout all processes from planning and development to production. Centered on the Toyota Production System or TPS, we are rethinking in a future oriented way how we work aiming to shorten lead times.

Moderator

We intend to expand this action company wide toward improving productivity. Our plant members have tackled the medium term to long term challenges of shrinking working population and young people turning away from manufacturing. While stepping up recruitment activities, we have improved workplace environments with efforts including measures to combat heat, creating production lines on which our diverse team members can work comfortably and also by implementing our future production plants project, which looks fifty years into the future. When it comes to development, we are working to improve our car making productivity to continue to meet diverse needs. Our Area 35 activities, which are meant to accurately grasp customer needs and optimize specifications and component types have improved development efficiency by the equivalent of three vehicle model redesigns on a trial basis in Japan.

Moderator

Going forward, we intend to further improve our development and production efficiencies by expanding these activities globally. We are working on establishing a system that will use digital transformation advances for seamlessly linking vehicle specification information from development to sales, which is currently correlated by people. Working together with our suppliers and dealers, we intend to strengthen our operational base for the future and improve our earning power. We will leverage this foundation to steadily advance our efforts to change the future of cars.

Moderator

And we will aim to transform into a mobility company. At the root of this is a desire to contribute to people's happiness through cars and to provide freedom of mobility to all. There is no clear definition of a mobility company. What is important is that we continue to act toward materializing our vision. We have been sowing seeds for the future, including building Toyota Ubuntu City, which is a test course for mobility that will begin Phase one occupancy and demonstration trials this fall.

Moderator

Also based on our third mobility concept, we have been working to materialize our path toward becoming a mobility company. Our path includes contribution to achieving carbon neutrality and expanding the value of mobility. With these as our pillars, we have deepened industry transcending cooperation and made efforts to expand the value of cars by integrating with social systems to create a safe and secure mobility society. This fiscal year, we will focus on our key themes of enhancing the resolution or multi pathway approach and establishing a foundation for Toyota unique software defined vehicles. In Toyota's multi pathway approach, our value desire is to contribute to the achievement of carbon neutrality while leaving no one behind.

Moderator

In contributing to CO2 reduction through various vehicle types, we will also leverage technologies we hone for next generation battery electric vehicles to further evolve powertrains overall. In addition to make each kind of powertrain a genuine option, we will work with many partners to drive advances in fuel and infrastructure. For internal combustion engine vehicles, we are continuing to refine our elemental technologies and strive to achieve evolution of engines, hybrid systems and fuels. In terms of achieving carbon neutrality when considering the current units of vehicles in operation, it is important to promote the shift to more environmentally friendly mobility centered on hybrid vehicles, which can immediately reduce CO2 emissions and to accelerate the spread of carbon neutral fuels. To meet the expectations of our customers around the world, we will continue to provide practical options that contribute to carbon neutrality, including more affordable hybrid vehicles.

Moderator

In order to popularize battery EVs in addition to technological innovation in vehicles and batteries, I believe it is necessary to create a battery ecosystem from battery material procurement to collection and reuse. We will create a framework for industry transcending cooperation and work hard to create an environment for popularization. When it comes to hydrogen mobility, the key to popularization is reducing the price of hydrogen. By accelerating the social implementation of hydrogen mobility in commercial vehicles, including through external sales of our hydrogen fueled power units, we intend to increase hydrogen usage, which will lead to cost reductions and infrastructure expansion. We will continue our efforts throughout the entire value chain without wavering from our aspirations for the future of hydrogen.

Moderator

Meanwhile, software defined vehicles will play a leading role in transformation from cars to mobility. Through software defined vehicles, we intend to achieve safer, more secure and more enjoyable mobility. The key to this is to increase the expandability of cars by renewing our electronic platform and employing Toyota's software platform, Air Ring. In addition, in doing so, chip performance will become more important than ever. Furthermore, for cars to connect with society, it is important to develop infrastructures such as in the form of seamless communications environments and data centers.

Moderator

Last year, together with Nippon Telegraph and Telephon Corporation, we started building that foundation. Based on these foundations, software defined vehicles will help expand various possibilities of added value. For example, we intend to materialize the diverse values that data and AI will create such as data based vehicle development and service evolution. AI agents that grow together with customers and services that utilize onboard sensors. Through co creation with our partners, we will continue to accelerate the development of a foundation for Toyota unique software defined vehicles.

Moderator

I have now shared with you our key initiatives for this fiscal year. To transform into a mobility company, we need to envision creating mobility society and pursue non sequential evolution or in other words, innovation. Together with many partners, we will work toward creating values for cars that are integrated with society and accelerate our efforts to change the future of cars. We would greatly appreciate your support and understanding.

Moderator

Thank you very much. We will now move to the Q and A session. Please wait a while as we prepare for the Q and A session. Let us now start the Q and A session. For the responders to the Q and A session, please come up on to the stage.

Moderator

Now let me introduce the attendees. First, Koji Sato, Chief Executive Officer Yoichi Miyazaki, Executive Vice President and Chief Financial Officer Masahiro Yamamoto, Chief Officer, Accounting Group. Please take your seats. Let us now start the Q and A session. We have people in the venue and online, but we will first take questions for people in this room.

Moderator

The person in the middle, in the front, in the corner. I am Sugito from Chunichi Shimon. Thank you very much for today. I have two questions. The year ending March 2025, about the results, our production stopped because of certification and you are solidifying your foundation, but, revenues increased and profits were reduced.

Moderator

So what is your interpretation of the results? I would like to pose this question to Mr. Sato. So should I answer can you ask your second question first? The second question, about the additional tariff imposed on cars by The United States.

Moderator

You mentioned that the impact for April and May would be JPY 180,000,000,000 for the tariff impact. What is the basis of this number? And if the tariff policy continues, will this impact your results for March 2026? I believe there will be further impacts, but what is your understanding of the impact, Mr. Sato?

Moderator

Thank you very much for your questions. Let me start with your first question. About our interpretation of the results for the previous fiscal year, I have three points to raise here. First, appreciation to others. As you mentioned, a lot of things happened last year.

Moderator

And globally, many customers utilized our cars. And even when the delivery time is very long, they waited for our cars. And we are very grateful for the to those customers. That is the number one reason behind the results of the year ending March 2025. I would also like to thank the dealers and also the suppliers which allowed us to deliver those cars.

Moderator

So appreciation to others is the first point that I would like to mention. There are two other points. Looking at the results, how important it is to follow the basic principles. Not being able to produce cars, was very difficult for us. The people on the Gimba, the frontlines, did their utmost.

Moderator

And despite the fact that they were very busy, they worked very hard to recover and restart production. And those efforts led to the financial results of last year. That is the second point. And third, as Mr. Miyazaki mentioned in his presentation, the profit structure change has had an impact on the financial results.

Moderator

Of course, vehicles have a very large impact on profits, but new vehicle impact fluctuates. When volatility is high or how can we avoid high volatility is a question. The supply chain has become stronger. We've been working on this for several years and the results are starting to be seen. And once those effects start to be seen, the extra investment capacity and strategy would be impacted by this.

Moderator

So those are the three points that I would like to raise regarding the financial results for the year ending March 2025. Your second question was about The U. S. Tariffs. Government to government negotiations are ongoing at the moment and the government officials are working hard now.

Moderator

So details of tariffs still moving. So at this moment, it's very difficult to forecast the future. But at the moment, there is already tariffs that are being imposed, and that part has been reflected in our forecast for this fiscal year. We don't want to waiver from our basic principles and, we will stay the course. So depending on whether you're looking at short term or medium term, what we can do will change.

Moderator

For exports to The United States, One Point Five Million units. Of course, we have many customers in The United States. So, desirably, we want to allocate to The United States. But in the short term, we have to look at how we allocate the cars. But over the medium to long term, appropriate products for the local area, should be produced locally and delivered locally.

Moderator

Best in town is, something that we've always talked about. In the community, in the country, as a local citizen, we are taking actions. So that pillar will not waiver. So over the medium to long term, we will continue to take that approach.

Moderator

Thank you very much. I would like to entertain the next question. Person in the back there, maybe second row from the front, please. I'm Ikeda of SANKEI newspaper. I have two questions as well.

Moderator

The first question is about this U. S. Tariff policy. The impact is so difficult to forecast accurately. However, the Toyota has been treasuring the domestic production level of 3,000,000 units.

Moderator

But is it unchanged and maintained at that level? Is that the right understanding? Or as Mr. Sato mentioned about mid to long term perspective, localization will be further promoted naturally. But in mid to long term, that area might be revised or readjusted.

Moderator

And is that would that become necessary to readjust the 3,000,000 units production, the system in Japan? You have a relationship with your suppliers. So as to The U. S. Tariffs, the parts suppliers might need to transfer the increased costs to their transaction price to you.

Moderator

What would be the position of Toyota to deal with the suppliers' requests like that? The suppliers' burden might be covered and accepted by TMC itself. Is that the direction? Or there could be maybe a combination of adjustment. You work together with the suppliers to further reduce the cost to cope with that situation.

Moderator

So including the additional burden upon these suppliers, what do you think of this The U. S. Tariff policy? So at the beginning, as the domestic production policy and aspirations, that's my first point I'd like to mention. And Mr.

Moderator

Miyazaki will add as to the substance to respond to your question. So actually, production has a significance here in Japan. We should never forget that. It should be unchanged. We like to maintain that level.

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However, because domestic production and supply chain should be ensured and protected. And by continuing export, we will earn the foreign currency. And by the earned foreign currency, Japan can purchase the energy necessary for the Japanese domestic activities and transactions. So from that standpoint, I think domestic production should be protected as a manufacturing industry initiative, it's an important point that we should keep in mind. From that standpoint, the domestic production and our aspiration for that and will continue in our future initiatives.

Moderator

So based upon that assumption, the details can be added by Mr. Miyazaki. Thank you, Mr. Ikeda, for your question. Earlier, I said that the profit structure of the TMZ, so I'd like to maybe recap that.

Moderator

So if we can show that, I'd like to show that again to you. But anyway, right now, as from your standpoint to the left hand side, twenty twenty three in March, the 700 and some five six million units that is a consolidated figure of the sales. At the time of COVID-nineteen, that was the situation that the 1,300,000 units, the consolidated sales reduction occurred. That is why it has come down to 7,560,000,000,000.00 yen 2,200,000,000,000.0 of the operating income was still achieved. And right hand side on top, you can see that the activities were launched at that time and then that this the margin or the profit went up to the 1.6 fold as to this destined to The U.

Moderator

S. A. Improvement is also achieved through these efforts. So as to the potential impact by the tariffs, as to the profit structure and business structure is the basis, we are not forced to take the too hasty action. We can continue a stable policy.

Moderator

And the 3,000,000 units we are talking about, as Mr. Sato mentioned, the export to U. S. Is 500,000 units. So for the customers, it might cause some problems.

Moderator

We have a long list of backorders. So that's the current situation. So it doesn't force us to revise and look at this domestic production structure, including this government negotiation. We will see and monitor how the negotiation will take place between the two governments. In addition, vehicles cannot be produced only by us.

Moderator

We need a cooperation of the suppliers and the customers, the related sales, dealers, networks. So all those parties need to collaborate together to take mid- to long term initiatives. So we are looking and monitoring situation. We have built this good profit structure already. So without taking any hasty action, we will play it by the year and then take stable actions.

Moderator

And as the I mentioned earlier, the automotive industry has quite an important significance and role to play in the 3,000,000 units of production in Japan. And then the we export the vehicles and earn the foreign currency of JPY 20,000,000,000,000. And then JPY 24,000,000,000,000 is the import expense we pay for energy and resources so that we are playing an important role for Japanese economy, and we'd like to continue to play that important role in the future as well. For the suppliers, what is our the care? For each supplier, we listen to their voices and requests to decide upon how to address the issues, and we will have a very detailed care and listen to their views.

Moderator

So manufacturing should be promoted together with the suppliers and dealers and sales network, so we have to pay due care to them. And then final wish is happiness for the customers. And then we will have to continue the operation of automobile manufacturing as well.

Moderator

The second point is the operating profit forecast that you just showed us. About The U. S. Business is my question. The tariff burden, will it be transferred to the vehicle prices or will you not be thinking about it for the time being?

Moderator

I understand it will be difficult to make a forecast. But in the profits that you have forecast, The U.

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S. What

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is The U. S. Sales volume that you assumed? People are talking about reduction due to last minute purchases in the previous year, but what is your outlook at the time being? So tell us about the relationship with the forecast.

Moderator

So I think it's a question of how to look at the sales volume. But when we plan or do a sales plan, we for financial results, look at the fiscal year, but for our business, we look at the calendar year. In April, in The United States, there was a last minute market demand going up. And there might be repercussions from that. So there will be pluses and minuses.

Moderator

But as you mentioned, it is difficult to forecast the future. So depending on how things develop, we would like to take the appropriate action. Maybe I shouldn't say fortunately, but in The United States, Toyota cars are still popular and the inventory level is less than ten days worth. And for our mainline hybrid, the turnover is in five days. So we will look at real demand, and I think we can make appropriate adjustments.

Moderator

With regards to sales price, we think it is up to the customer. The competitive situation, real demand situation will be looked at as we did before. So far, customer demand was very strong. And in the past, we've raised prices if when demand was high. So we will look at the situation and take the appropriate action at the appropriate timing.

Moderator

Just because of tariff rising prices, in hastily is not the type of reaction Toyota is thinking of. Thank you very much to Mr. Ikeda.

Moderator

So we'd like to entertain next question. The person in the front row, please. Yao of Nihon Keizai Shinbun. I have two questions as well. Yes, similar question about The U.

Moderator

S. Tax policy or tariff policy. In the future, would that have impact upon your future business? As now, how do you analyze and look at that potential impact short term versus long and midterm, the countermeasures? But this tariff new policy, is that do you think a transient onetime change?

Moderator

Or the for your U. S. Business, is that going to be more long lasting impact for your business? Could you please comment on the future outlook? The second question is about 3,000,000 units of the volume to be maintained in Japan.

Moderator

But to maintain that level, how do you intend to take actions and measures? Because to The U. S, The U. S. Import means increased cost incurred so that maybe you increase export to other regions or sell more in domestic market?

Moderator

What are those measures that you're thinking about in order to maintain the 3,000,000 units of production volume in Japan? Thank you for your question, Mr. Yao. Let me repeat some of the points that Toyota wants to be the best in town. That's our motto, to be locally based company.

Moderator

So that main axis that even though The U. S. Tariff policy might change, our axis and policy will not change. As I said, that in the long term, that local production, local development will be emphasized. In the short term, to the actual demand, the optimal response and operation should be devised.

Moderator

So these are the combination of efforts we will make to deal with the change. On the other hand, the tariffs, would that be eternal ones, permanent ones? We are not in a position to decide on the tax tariff policy. So whatever the situation will change, we'd like to be flexible to deal with, and then we will maintain our basic pillar and policy on the course and then deal with the situation. 3,000,000 units of volume maintained in Japan.

Moderator

To do that, as I said, we should strengthen our foundation. That is a strong activity. To maintain the domestic production level, that strong foundation is crucial. In other words, so called like supplementary efforts, well, like we support and invest for the suppliers, but it's not that to return the money back to them, but rather in order for them to further improve the productivity and have the spare room, we just work so closely with the suppliers. It's a work together.

Moderator

So we now have the high level of the production operation in place. Just so maybe the people in the field workplace might not have enough energy or the spare capacity to improve further. So we should give them the spare room and energy and capacity so that they can work better. So we will create a good climate and environment for them to do that. So it's not just a funding support for them and return the money back to them.

Moderator

But in the mid to long term, it will eventually boost our productivity together and further reduce the costs incurred and then effectiveness will be improved. And then eventually, the total competitive edge will be further enhanced. So domestic production level should be maintained. By that protection, we will strengthen our productivity and then competitiveness. And that, I think, is a very important cycle we like to achieve.

Moderator

Thank you very much.

Moderator

Thank you very much to Mr. Yao. In the middle, third from the front row. Kawaguchi from Nikon Kogyo. Except for tariff impact, fiscal twenty twenty five, what kind of year will it be?

Moderator

How do you position this year? A major transformation in a century. It's been several years since this has been discussed. And diversification and localization, you are working on these, but, how is business going to be this year towards 02/1930? And my second question is about earning power.

Moderator

On the hybrid side, profitability is almost equal to gasoline cars. I think it was last year that Mr. Miyazaki talked about 5,000,000 hybrid vehicles. So does this milestone is this milestone unchanged? So, and what about your plans for improvement for PHPs?

Moderator

Thank you very much for your question. The positioning of fiscal twenty twenty five, as I mentioned in the presentation, this year in a sense, is a year where globally, we are now seeing the speed towards electrification in each region. So depending on the region, the speed or how electrification will develop, will be clearer. In case of battery EVs, in the past, we discussed this on a global basis. Obviously, now China is moving fast and not only electric vehicles, but intelligence plus EV is pushing forward the mobility.

Moderator

So a battery EV leading technology will be incorporated so that, we can push forward mobility. In the case of, battery EVs, we will be delving deeper into this area. And for hybrids, realistically speaking, we are seeing a shift to BEVs. But having said that, there are many ways to realize carbon neutrality. So an approach that combines vehicles with carbon neutrality will be very important.

Moderator

So from the fuel side, carbon neutrality will have to be realized. It will be a very important turning point towards that. So hybrid PHEV will be the pillar. But in addition to that, carbon neutral fuel will be combined. So that kind of practical solution will be accelerated.

Moderator

That will be very important. So in a sense, the basic pillars remain unchanged, but the resolution of each element will be higher than before. There is another point that we focus on, which is creating an environment or ecosystem. Just pushing forward evolution of the vehicle does not lead to realization of mobility. Battery EVs, hydrogen requires energy infrastructure and the legal framework.

Moderator

So mobility of cars alone will not allow us to push forward a mobility society. And so a comprehensive approach is necessary, which means that we have to work with energy or IT industry people. And we also have to work with government to create the environment and that will be the foundation. And this year, we have to focus more on creating this foundation. Now earning power will be discussed by Mr.

Moderator

Miyazaki. So in the past and this year, as everybody is pointing out, it is the future is unclear, uncertain. But in this environment, what we have to do is to make sure we continue to produce, making happiness for all. So maintaining JPY 3,000,000 in Japan and full operation of overseas plants is necessary, and we have to make sure we continue to produce ever better cars. Going back to the basics and doing what we have to do is what we will do in 2025.

Moderator

For this year's forecast, 3,800,000,000,000.0 will be the starting point. But from here, we want to build up so that we can realize more. I mentioned JPY 3,800,000,000,000.0, but, tariff except for tariff and exchange rate, it will be JPY 1,000,000,000,000, that will be JPY 1,000,000,000,000. So JPY 4,800,000,000,000.0 in earning power is something that we can realize. So how to step up from there is something that we want to think about.

Moderator

We need to create products that meet the real demand of our customers. For hybrid vehicles, I mentioned before that real demand is very strong. So initially in 2026, '5 million production, something that I mentioned and I talked about bringing this plan forward. But after that, we decided to focus on strengthening the foundation. So we stopped for a while to reorganize development and production.

Moderator

So for hybrids, last year, as was mentioned before, plus 850,000 compared to the previous year is what we realized. But this year, we expect a growth of 5%. So JPY 4,700,000.0 is what we expect. The original 2026 numbers is the plan that we had. But how to front forward that plan is something that we will continue to work on, and we want to accumulate our earning power as we do so.

Moderator

And about PHEVs, Once we as we have continued to decrease on cost, other variation units, I believe, will be able to produce profits. I will be repeating myself, but we will do what we have to do now and we want to further strengthen our earning power.

Moderator

The person with the gray jacket, please? I'm Arrayo with TV Tokyo. I have a question to Mr. Asato. Two questions.

Moderator

One is that the target production volume this year that the external environment is getting difficult, but the 10,000,000 units have been already mentioned. Six months ago, Mr. Miyazaki said, the production plan has been prepared and the OEM has a duty to steadily produce according to the target. But in the more difficult environment, 10,000,000 units were still launched. What's the purpose of this 10,000,000 units announced?

Moderator

The group collaboration, way it should be, that's my second question. The Toyota Industries has now talked about that to go private. So the Toyota Group, you have a policy based share cross shareholding. So the way the Toyota Group structure should be the way it should be, what do you think of including the potential rumor about the Toyota industry going private? Thank you for your question.

Moderator

So about the production and the volume, 10,000,000 units announced and what's the aspiration for that? Well, compared to the previous term that the actual performance showed, you produce steadily and properly, that is the basis and important factor to maintain the profitability. So we focused in the last one year to further strengthen foundation. What is the means earning of the 10,000,000 units? We worked so hard to strengthen the foundation.

Moderator

And as the outcome result and fruit has been cropped, in other words, the production has become stabilized and produce high quality vehicle and deliver that to our users. That's one of the important targets for us. For example, but the investment the total comprehensive investment for human capital in the last several years, for example, includes in the production line, the operation might stop. Sometimes you need a maintenance work or sometimes frequent repair might be necessary in some of the facilities. So maybe upgrading the investment for that is quite important and it's a big investment as well.

Moderator

So the frequently, the production line had to be stopped, but now it doesn't have to be stopped. It's a Kaizen improvement, which has been achieved in the last several years. So you don't have to stop this production line. That is a better efficiency of the production. So that kind of this in advanced investment has borne good fruit.

Moderator

And then you could have a very good quality and efficient production, which has shown this strengthened foundation. That is the basis and that's why we are still quite aware of this unit's target. And that unit is so important to support and protect our supply chain. From that standpoint, we put it at a threshold in the target. And then we'd like to continue our efforts so that we can continue to steadily produce high quality vehicles.

Moderator

And second point is the collaboration among the Toyota Group of companies. And of course, we like to transform to a mobility company. That's our grand aim. An entire group is trying to become a mobility company. And then that's a challenge, common challenge for all of us.

Moderator

How should we be prepared in what confirmation we need to achieve this goal? I personally feel that the productivity and the efficiency should be improved. Then there's a vertical integration might be better. It's more efficient to have vertical, the integrated organization. But we aim at long term, annual based growth so that the automotive industry should continue to track this growth path.

Moderator

So in this sense, each company within the Toyota Group should have its own strength. Within the group, what is the strength of that company within the entire Toyota Group? And then that the significance and meaning is quite important. We are the vehicle supplier. That is the TMC.

Moderator

But the TMC, the vehicle producer is supported by different domains and each member companies has its own aspiration to achieve a certain goal and CEO of each group of the group companies, I think, are trying to set those goals. Of course, I'm CEO of the Mr. Toyota is the leader, the Chairman of the entire group and his message and aspiration is the basis of our efforts and we will continue discussion within the group. Toyota, the industries and how it's positioned, Of course, it's a regional company of the TMC. So it's a very important company historically and within the TMC Group that is very important to do the forklift as well as engine and other businesses as well.

Moderator

So it's the important one of the important companies within the group. So their position stays the same. May I clarify 1,100,000 units, the target you said. Now external environment is deteriorating. You produce 10,000,000 units and you have outlook of global economy that you can still sell these many vehicles you intend to produce.

Moderator

Maybe Mr. Miyazaki can add. But outlook of the global economy, we cannot define the global economic outlook. However, we have a regional headquarter system. In each region, we have a CEO, and we discuss the global economy and the regional economic outlook to come to our overall outlook.

Moderator

So our own outlook was 10,000,000 units. Aim, a goal we'd like to work toward. But it's not just a target, but it's like the basic standard sort of cost to it's not really the goal or target we'd like to achieve. So please understand the nature of this 10,000,000 units. In the past, I already told you, but in many regions, we like to strike a good balance and a good business in each region.

Moderator

That is a strong weapon for our company to achieve the stable business and profitability. Therefore, in particular region, if it catches cold, maybe the remaining healthy regions can complement and supplement for each other. So in case that the very active region versus the sick region, the vehicle demand might not match, Then I think each regional markets and markets will collaborate among themselves. And then we try to strike the balance between the supply and demand so that this system and structure can be stably operated so that we like to work harder with the suppliers. Naturally, 10,000,000 units is not the end of it.

Moderator

We are not aiming at achieving this as a target. We like to build a good car one by one, and eventually, it might achieve 10,000,000 units. So we like to give the due care to build a good quality car for each customer and user.

Moderator

Thank you very much. I apologize to the people raising their hand in this venue, but we would like to take questions from people online at this juncture. And then we will come back to this venue again later on. So if you have any questions from online, please use the raise hand button. Please turn on your microphone and camera if you are called upon to speak.

Moderator

Terasaki san from Best Car. Please turn on your microphone and camera before you speak. This is Tarasaki from Beskar. I have two questions. Slide 11, you talk about sales volume forecast by region.

Moderator

Tariff and exchange rate impact was large. You mentioned JPY 1,000,000,000,000, I think, but if you look at sales volume to the to North America, 2 Point 9 4 Million for next year is your forecast. Compared to this year, it is an increase of over 200,000 units. Mr. Miyazaki talked about, backorders, but are there any other factors that lead to this increase?

Moderator

Please tell us about the basis of this number. That is the first question. Maybe we should take the second question first. Can you give us the two questions together? Now to my second question.

Moderator

Also on Page 11, you talked about breakdown of sales volume by types of vehicle, 213% for BEVs, three and ten thousand is the number that you have. This is a big forecast. But if you as of 2023, your announced plan was BEV 1,500,000 by 2026 was the number that you gave us. So in one year, five times as many would be very difficult. Will you be reviewing your plan?

Moderator

Well, according to media reports, some people say that you have already reviewed the plan, but are you in the process of review? So the question is about BEV sales strategy. That is my second question. Thank you very much to your question, Mr. Terasaki.

Moderator

First question, last year in North America, as I mentioned in my presentation, the Indiana plant, because of quality issues, had to stop production for a long time. But this year, this factor will be gone. So Indiana factory production will be back to full operation and for vehicles for which we have back orders, we'll be able to see increase in production. But as I mentioned before, there may be many other changes. So we may not have been able to forecast everything.

Moderator

But at this moment, these are the numbers that we have in mind. But as the situation changes, intend to make adjustments as necessary. So each vehicle should be sold and delivered to our customer with attention to detail. And as and the sum of those efforts, I hope we are hoping will lead us to achieve those numbers. Terasaki san, to your second question.

Moderator

This is Sato speaking. I will respond to that second question. About the BEV sales plan, an increase of more than 150,000 new vehicle impact can be incorporated. So there will be vehicles launched and announced and outlook for those is the basis. Point 5,000,000 in 02/1930 or 1,500,000 in 2026, those are the numbers that we have announced before.

Moderator

But the basis of our calculation is real demand. So real demand but real demand will change. So if the pace of real demand changes, based on those changes, we will be changing those reference numbers, especially preparation of the supply chain and investment timing are things that we have in mind when we came up with these numbers. Battery EV real demand is starting to be clearer. So 1,500,000 is a number that will be reviewed.

Moderator

Thank you very much.

Moderator

I would like to entertain another person online from Newspix, Kiyarashi san. Please turn on your microphone and camera. Kiyarashi san, please. Thank you. Can you hear me well?

Moderator

Yes. Thank you. I have a question. About U. S.

Moderator

And China, I have one question to each country about each country. The first point is The USA. It's a direct question. But earlier, you already mentioned that the mid- long term versus the short term, how you prepare yourself to potential tariffs. But in the mid- to long term outlook that you provide these pseudo products to the local customers, it's the best in town through the local production.

Moderator

If the tariff will stay permanently, that production capacity locally should be enhanced or you might have to build new plants there. Is it possible scenario? That's my first question. The second question is question about China. So that in the material, you talked about China, year on year comparison, 94.1%, that was a number.

Moderator

But in terms of share, in the last several years, the local the company is getting strong and you are having difficulty. But you will be launching emphasizing your effort in China to recover your activity. What's the strategy? Taking into account the change of environment of the competitiveness in Chinese market. So what's your outlook in China?

Moderator

Thank you for your question. But thank you, KRS, for your question. The first is mid- to long term outlook. Naturally, it's been doing this for some time. In The U.

Moderator

S. A, we have USMCA, which is the local production the local the target to increase the local the procurement level according to the rule. And then so local production, local supply and that the local supply percentage ratio should be increased steadily from BCP standpoint. If even though some incident occurs that the local production is still possible, not just vehicles, but units as well, that the local the production local procurement should be further promoted. We've been doing this for some time.

Moderator

But because of that, even though the tariff is there, it's not our effort. We've been doing something we should do, and then we steadily perform our duty. That's something we intend to do. As a result, this if the things go smoothly, we might accelerate that action. But as I said, everything is not 100% predictable.

Moderator

Within that uncertainty, we should not sway from one way to other, but we will take a steady one and stay in the course and make a final decision according to this monitoring. As to the China, let me respond on China. Our outlook on China, China is not one market, but rather the 1,400,000,000 population in China, we are not in a position to take care of all those people by our business. We are not in that position. So from that standpoint, the local coastal areas, that the big cities, the population we like to target, that is where the real focus in terms of the segment of Chinese market.

Moderator

So in that sense, naturally, there are local manufacturers and suppliers in China. OEMs are very strong in certain provinces or regions. So Chinese market should be scrutinized by the in details by region and region. So we should avoid the direct competition, but there are certain then lots of areas where we can coexist with the Chinese structures. So in that Chinese situation, of course, as the market shares were, that the units and volume targets were achieved, thanks to these suppliers and also the dealers there.

Moderator

As to the profitability in China, which we've been telling you, that in Chinese business, our profitability level is highly evaluated compared to the local competitors. Our level is on par with the Chinese competitors. So that's how we evaluate our Chinese business performance. So our strength should be leveraged further in the future. We announced last month that the development structure will be enhanced in China so that BEV suitable for Chinese customers will be launched and Lexus brand, Toyota brands will be enhanced and protected further.

Moderator

Kiara san, thank you very much. Now going back to this room, we will take questions from people in this room again. In the middle, the person from the in the second row? Hi, Mizumachi from Nikon Automobile. I have a question about the Japanese market.

Moderator

Last year, there was a certification issue and quality issues leading to long lead time and low production. But if you look at this year, we have some negative numbers. Can you tell us about the background? And 3,000,000 production in Japan in order to maintain that, at least half of that number should be sold in Japan. But over the medium to long term, what is your outlook about the domestic market?

Moderator

Mizuho san, is it just one question? About sales in the Japanese market. Of course, we have a model life cycle. So when you go to the peak, there will be a stable period. And then there are some differences in numbers.

Moderator

But basically, we are aiming at 1,500,000 being sold. So there is no strong will or background here. In thinking about the model life cycle, we came up with these numbers. Now about the medium to long term outlook, it has always been said that, in Japan, the population is declining and the birth rate is declining, but the how to reduce the vehicle replacement cycle is something that we want to work on to revitalize the Japanese market. Attractive cars will have to be launched.

Moderator

And in order to make the replacement cycle shorter, we have to work more to sell them in a better way. So including KINTO and other initiatives, we will continue to try new efforts. Let me add something. Thank you very much for your question. Your question was about the future of the Japanese market.

Moderator

As Mr. Miyazaki mentioned, how can we produce and deliver cars that people would want to buy? If vehicles are produced based on traditional thinking, We just launched a new crown series, but ten years ago, a crown was an FR sedan, an authentic product that was the, stereotype image of the model Crown. But what is the significance of Crown being a long seller? That is something that we reviewed anew to come up with a new product.

Moderator

So the old rather than looking at the old framework, what is necessary now in this market is something that we have to face. We are a carmaker, so we need to produce cars that people would want to purchase in Japan. We have to come up with ideas to launch those products. We will need to solidify the foundation, come up with extra capacity so that, we can produce cars that are suitable for the local market. Thank you very much to Mr.

Moderator

Mizumachi.

Moderator

Time is running short, so we'd like to entertain just one last question, if we may. There are a person in the front section, Yamamoto of the Freelance Journalist. Earlier in the presentation, you talked about the multi pathway strategy, which will be unchanged. But hybrid is a strong area. It's doing quite well.

Moderator

On the other hand, part of the product of VEV at the PHV is not really not growing as you expect. In hydrogen vehicle, so far, you are trying to boost the spirit, but maybe that there's a toning down about the hydrogen vehicles, I feel. So hydrogen engine might be applied to motorsports, and it's been five years since you applied and then toward the end of the year, the Fuji twenty four hour race that this hydrogen vehicle is to participate. At that time, you Mr. Sato was the President to launch that hydrogen engine for the motorsports.

Moderator

So what's the progress state of the hydrogen engine? Another question, earlier that you told about this group strategy, you supply this suitable car to each region. On the other hand, the enjoyable the experience, like the wow experience, like that kind of car that Mr. Sato likes, wow experience to be given by a car. So it's sort of like but there's lately, we don't really see many new models developed by you, which is suitable for that Wow!

Moderator

Experience. About the pathway strategy, yes, we will maintain that strategy. The ICE will be further advanced and then the hybrid system will become more efficient.

Moderator

And then

Moderator

we will continue this technology development. So smaller compact car with a higher efficiency and also the output characteristics should be further enhanced. That technology development is being promoted. So that's a powertrain evolution, which should be driven, and we'd like to continue that efforts in that area. On the other hand, in a way, fuel and energy might make a difference in terms of where we emphasize pathway toward the popularization.

Moderator

So the energy availability might make a difference, I feel, especially hydrogen. The major challenge for hydrogen is that hydrogen itself, we are so picky about its origin. And hydrogen becomes such an expensive energy source. Energy cost is so expensive, it's too expensive to popularize. It's a barrier for popularization.

Moderator

So in order for us to promote that, the hydrogen use should be increased first. That is an initiative we first have to take. And then only for the passenger car, we will do our part. But 60x more the sensitivity for the commercial vehicle. One, the heavy duty truck versus a small passenger car, the size or the scale is 60 fold difference so that we are trying to make efforts in commercial vehicle as well so that cost reduction efforts should be made.

Moderator

Then finally, the technology of the hydrogen engine could become quite useful because hydrogen engine is combustion control is already in in house technology. So efficiency is one challenge and another one that the combustion of the hydrogen is an issue because for ICE, it's the combustion efficiency could be maybe enhanced by the better hydrogen combustion biofuel, e fuel, if they are supplied. In the engine technology, because we developed the hydrogen technology, we have benefit to be enjoyed by the accumulated technology. So hydrogen gives us a clear starting point. But eventually, it will give us the synergy to really lead us to the multi pathway development.

Moderator

So standard on hydrogen should not be just scrutinized, but that's the starting point to lead us to this synergy of multi pathway strategy. So I think we now are seeing the visible sign. So hydrogen is just a kickoff. Of course, liquid hydrogen is one area where we work toward and work harder, and I hope you continue to support us. Our Chairman, Toyota, is driving the car itself, a hydrogen vehicle, and he's a leading figure to promote the hydrogen society.

Moderator

So we would like to realize the hydrogen society and multiple of the simultaneous efforts are needed. So we will never give up to do that, and we'd like to reassert our strong determination. The second point, the car which induces a wow spirit, I appreciate your question. Yes, I agree to you. Exciting vehicle is necessary.

Moderator

The car should be enjoyable. Otherwise, the car is not the car. It will just turn into a commodity. So we have a determination that the car should never be looked at as commodity. So that the function wise and logical thinking wise and then based upon the left side of the brand, they you cannot sell this the products based upon the catalog of the vehicles.

Moderator

You just merely change the the model the model switch and have a new design or the engine, it won't sell anymore. So how passionate you are to produce a car features trigger the sense of a wow in you? Of course of course, you have to be a sharp feeling to have a appealing car. It it's not just a sports car. For the ordinary cars as well, there you have to instill your passion to appeal to the customer to their heart so that I think each project team should share that sense.

Moderator

And I'm encouraging all the project team members to build such a car, and we are really encouraging. And that's the way TMG should be, and that's my passion. And in this fiscal year, we'd like to work hard to achieve this goal. So to your question and you are thinking about model, As time is right, we will disclose the new Moto to you. But I cannot disclose the name right now today at the press conference.

Moderator

So at another occasion, we hope we could be ready to tell you and announce you this new exciting cup.

Moderator

Thank you very much to Mr. Yamamoto. Now it is time. So let us conclude the Q and A session. So I would like to ask the three gentlemen to stand up.

Moderator

You very much. With this, we conclude the financial results meeting for fiscal twenty twenty five. Thank you very much for watching and coming.

Analysts
    • Moderator
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Key Takeaways

  • For the year ended March 2025, Toyota reported operating income of ¥4.80 trillion—down from ¥5.35 trillion in the prior year after stripping out one-time gains and investment costs—driven by production outages in the U.S., volume declines and motor-mix shifts but offset by price revisions, ¥510 billion of cost reductions and expanding value-chain profits.
  • In its forecast for March 2026, Toyota expects sales of ¥48.5 trillion and operating income of ¥3.8 trillion, with major headwinds from foreign-exchange (-¥745 billion), material costs (-¥350 billion) and U.S. tariffs (-¥180 billion) partly offset by the removal of one-time Hino expenses (+¥400 billion) and continued investments (+¥470 billion).
  • Electrified vehicles accounted for 46.2% of sales in FY25 (up 850,000 HEVs year-on-year), and Toyota projects this to rise to 49.8% in FY26 as part of its “multi-pathway” strategy combining HEVs, BEVs, PHEVs and hydrogen/fuel innovations.
  • To underpin a stable annual production target of 10 million units (including 3 million in Japan), Toyota is reinforcing its operational foundation via TPS-driven improvements, digitalization, supplier investment and growth of value-chain earnings—aiming to exceed ¥2 trillion in recurring aftermarket and finance profits.
  • Despite a profit decline, Toyota raised its full-year dividend to ¥90 for FY25 (+¥15) and guided FY26 dividends to ¥95 (+¥5), underscoring its commitment to a stable dividend-increase policy.
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Earnings Conference Call
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