Iran war costs Toyota £3bn as prices of materials soar and sales fall | Toyota
Toyota reported a £3bn loss from costs arising from the war in Iran, as prices for parts and materials rose and sales fell.
In one of the biggest warnings yet about the impact of the war on business, the world’s biggest carmaker said profits had fallen in the financial year to March as it “likely cannot absorb new impacts from the Middle East”.
The biggest blow for the Japanese manufacturer was a 400 billion yen (£1.9 billion) increase in war-related material costs, while it lost a further 270 billion yen due to lower sales. Toyota is the dominant automotive brand in the Middle East.
Toyota’s operating profit fell to 3.8 trillion yen by March; Donald Trump’s taxes cost 1.38 trillion yen.
US-Israeli attacks on Iran and the resulting closure of the Strait of Hormuz have shaken the global industry. Trump, who is under political pressure due to high gasoline prices in the US, has said a deal to reopen the strait is on the table, but Iranian officials have so far given no indication they intend to accept.
Asian manufacturers have been particularly affected by the turmoil due to their greater reliance on exports from the Gulf, many of which have been stuck since the start of the war. For example, Japan’s auto industry lobby group said 70% of the country’s aluminum imports come from the Middle East. Oil prices also increased tire prices.
Toyota said its profits through March 2027 will fall for the third year in a row due to the impact of the war. It expected operating income next year to fall by more than a quarter to 3 trillion yen (£14 billion).
Takanori Azuma, Toyota’s chief accounting officer, said: “We do not believe we can fully offset the 670 billion yen negative impact in the Middle East.”
According to Reuters, Azuma said the impact of the Iran war was felt in everything from “fuel costs, transportation costs, and the cost of paint and other materials used in vehicle assembly plants.”
Toyota sold 9.6 million cars for the year; half of these were hybrid cars that combined a gasoline engine with a small battery. Its global sales increased 2% during the year, driven by 9% growth in North America.
Toyota has focused its electrification efforts on hybrids despite higher pollution, betting successfully on a slower transition from fossil fuels than rivals expected. It sold just 600,000 battery-powered cars during the year, but that figure was more than double the previous year.
