Profits thinning fast for Japanese automakers amid growing tariff concerns

Major Japanese automakers are forecasting a sharp decline in profit for the current fiscal year ending March 2026 and warning of tougher times ahead, as concerns grow over the impact of US tariffs.

Companies that have issued earnings guidance cited tariffs imposed by the US administration on automobile imports as a key factor behind their cautious outlooks. A strengthening yen is also seen as a potential drag on profits alongside the tariffs.

Toyota expects its net profit to fall 34.9 percent year-on-year to 3.1 trillion yen ($21.24 billion). The company estimates that US tariffs in April and May alone will reduce its operating profit by 180 billion yen.

Honda projects an even steeper drop, seeing a 70.1 percent decline in net profit to 250 billion yen for the current fiscal year. The automaker blamed both US tariffs and exchange rate volatility, warning that the tariff impact and recovery efforts will have a negative effect on operating profit.

Nissan, facing more severe challenges, announced drastic restructuring plans, including shutting down seven of its 17 factories and cutting 20,000 jobs globally. The company refrained from issuing a profit forecast, saying that the uncertain nature of US tariff measures makes it difficult to rationally estimate full-year results.

Mazda and Subaru have similarly withheld earnings forecasts.

A recent survey reveals that about one-third of companies listed on the TOPIX index expect lower profits for the current fiscal year compared to last year.

SMBC Nikko Securities analyzed earnings reports from 630 TOPIX-listed firms on the Tokyo Stock Exchange that had released results by Monday and found that 35 percent, or 224 companies, are forecasting a decline in net profits, the public broadcaster NHK reported.

Sectors such as transport equipment, steel, and marine transportation anticipate particularly sharp downturns, blaming increased costs and reduced trade stemming from US tariff policies.

Meanwhile, Japan's chief tariff negotiator Ryosei Akazawa is making arrangements to visit the United States again as early as next Thursday to hold a third round of ministerial-level talks, TV Asahi reported on Wednesday. Japan has expressed the hope that US will lift its extra tariffs on automobile imports from Japan.