Toyota Motor Corp/ (TM)

Toyota primarily conducts business in the automotive industry, also operating in financial services and other industries. The worldwide automotive market is highly competitive and volatile, with demand affected by economic, social, and political conditions, as well as the introduction of new vehicles and technologies. Toyota estimates that annual worldwide vehicle sales totaled approximately 92 million units in 2025. The global automotive market maintained a pace of expansion in 2025, with a year-on-year increase of 3%. In North America, new vehicle sales were approximately 19.90 million units, an increase from the previous year. In Europe, new vehicle sales increased from the previous year to approximately 18.60 million units. New vehicle sales in the Chinese market totaled approximately 26.60 million units, remaining largely flat compared to the previous year. The share of each market across the globe was 29% for China, 22% for North America, 20% for Europe, 4% for Asia, and 10% for India and the Middle East.

Toyota faces intense competition from automotive manufacturers globally, with competition likely to further intensify as technological advances in CASE technologies progress. Factors affecting competition include product quality and features, safety, reliability, fuel economy, the amount of time required for innovation and development, pricing, customer service, financing terms, and tax credits or other government policies. Toyota held a domestic market share in Japan (excluding mini-vehicles) on a retail basis of 50.9% in fiscal 2026. In North America, Toyota's market share was 15.1% in 2025. In Europe, Toyota's market share was 6.6% in 2025. In Asia (excluding China), Toyota's market share was 13.0% in 2025. In China, Toyota had a 7.4% market share in the domestically produced passenger vehicle market in 2025.

Toyota generates revenue primarily through the design, manufacture, assembly, and sale of passenger vehicles, minivans, and commercial vehicles such as trucks and related parts and accessories. Its financial services business consists primarily of providing financing to dealers and their customers for the purchase or lease of Toyota vehicles, including retail installment credit and leasing. Toyota also conducts information technology related businesses including a web portal for automobile information called GAZOO.com. Toyota sells its vehicles in approximately 200 countries and regions.

Toyota's automotive operations include the design, manufacture, assembly, and sale of passenger vehicles, minivans, and commercial vehicles such as trucks and related parts and accessories. Toyota's vehicles can be classified largely into electrified vehicles and conventional engine vehicles, with a product line-up including subcompact and compact cars, mini-vehicles, mid-size, luxury, sports and specialty cars, recreational and sport-utility vehicles, pickup trucks, minivans, trucks, and buses. Toyota's luxury cars are sold primarily under the Lexus brand name. Toyota's sales revenues from its automotive operations were ¥45,417.7 billion in fiscal 2026, ¥43,199.8 billion in fiscal 2025, and ¥41,266.2 billion in fiscal 2024. Toyota sold 9,595 thousand vehicles in fiscal 2026 on a consolidated basis. Toyota's financial services business includes loan programs and leasing programs for customers and dealers. Toyota's sales revenues from its financial services operations were ¥4,857.1 billion in fiscal 2026, ¥4,481.1 billion in fiscal 2025, and ¥3,484.1 billion in fiscal 2024. Toyota's share of financing provided for new car sales of Toyota and Lexus vehicles in regions where Toyota Financial Services Corporation operates reached approximately 30%. The percentage of credit losses remained at stable levels of 0.43% in fiscal 2026 and 0.46% in fiscal 2025. Finance receivables for all of Toyota's dealer and customer financing operations were ¥38,966.6 billion as of March 31, 2026, representing an increase of 15.9% compared to the previous year. As of March 31, 2026, 52.2% of Toyota's finance receivables were attributable to North America, 15.4% from Europe, 11.4% from Asia, 10.0% from Japan, and 11.0% from other areas. Approximately 40% of Toyota's unit sales in the United States during fiscal 2026 included a finance or lease arrangement with Toyota. Toyota Finance Corporation has 15.7 million card holders as of March 31, 2026. Sales revenues for all other operations totaled ¥1,651.4 billion in fiscal 2026, ¥1,447.1 billion in fiscal 2025, and ¥1,368.1 billion in fiscal 2024.

Toyota's automotive operations segment is its largest by sales revenues. Sales revenues for the automotive segment increased during fiscal 2026 by ¥2,217.8 billion, or 5.1%, to ¥45,417.7 billion compared with the prior fiscal year. Operating income from the automotive operations decreased by ¥1,163.2 billion, or 29.5%, to ¥2,777.0 billion during fiscal 2026 compared with the prior fiscal year. Sales revenues for the financial services operations increased during fiscal 2026 by ¥375.9 billion, or 8.4%, to ¥4,857.1 billion compared with the prior fiscal year. Operating income from financial services operations increased by ¥168.2 billion, or 24.6%, to ¥851.7 billion during fiscal 2026 compared with the prior fiscal year. Sales revenues for Toyota's other operations segments increased by ¥204.2 billion, or 14.1%, to ¥1,651.4 billion during fiscal 2026 compared with the prior fiscal year. Operating income from Toyota's other operations segments decreased by ¥49.1 billion, or 27.1%, to ¥132.0 billion during fiscal 2026 compared with the prior fiscal year.

Toyota has been advancing numerous initiatives to entrench the Toyota Group Vision throughout the organization. Toyota is working towards having all of its vehicles become connected vehicles, creating new value and reforming businesses by utilizing big data. Toyota has successfully reduced the size of its all-solid-state batteries by one-third compared with conventional batteries while maintaining performance, targeted for commercialization between 2027 and 2028. Toyota established Lexus (Shanghai) New Energy Co., Ltd., a new wholly owned company in Jinshan District in southwest Shanghai, to develop and produce BEVs and batteries, with production scheduled to begin from 2027 onward, an initial production capacity of around 100,000 units per year, and 1,000 new jobs planned for the start-up phase. Toyota announced a partnership with Idemitsu Kosan Co., Ltd. to work toward the mass production of all-solid-state batteries for BEVs. Toyota announced a collaboration with Sumitomo Metal Mining Co., Ltd. aimed at mass production of cathode materials. Toyota announced a partnership with Daimler Truck Holding AG in May 2023. Toyota unveiled plans to bolster coordination with BMW in the field of hydrogen. Toyota entered into a partnership in November 2024 with GLP Investment (Shanghai) Co., Ltd. in the field of high-value-added green trunk-line logistics. Toyota agreed with Chiyoda Corporation to jointly develop a large-scale water electrolysis system. Toyota established Commercial Japan Partnership Technologies Corporation in 2021 together with Isuzu Motors Limited, Hino, Suzuki Motor Corporation, and Daihatsu. Toyota Safety Sense has now been installed in more than 61 million vehicles globally as of March 2026. Woven City saw its official launch on September 25, 2025, with some residents having begun moving in. Under Phase 1, the total population of Woven City is expected to reach approximately 300 in the future. Toyota recorded ¥281,140 million in costs and expenses related to the Hino certification issues for the year ended March 31, 2025. Hino ceased to be a consolidated subsidiary of TMC effective April 1, 2026. Toyota filed approximately 19,000 patent applications domestically and internationally in 2025. Toyota was ranked 1st among companies and 1st among automobile manufacturers in Japan in terms of the number of patent registrations as of December 31, 2025. In the United States, Toyota was ranked 8th among companies and 1st among automobile manufacturers in terms of the number of patent registrations as of December 31, 2025.

Toyota's total revenues for fiscal 2026 were ¥50,684.9 billion, compared to ¥48,036.7 billion in fiscal 2025. Net income attributable to Toyota Motor Corporation was ¥3,848.0 billion in fiscal 2026, compared to ¥4,765.1 billion in fiscal 2025. Operating income decreased by ¥1,029.3 billion, or 21.5%, to ¥3,766.2 billion during fiscal 2026 compared with the prior fiscal year. Net cash provided by operating activities increased by ¥1,775.9 billion to ¥5,472.9 billion for fiscal 2026. Cash and cash equivalents were ¥12,659.6 billion as of March 31, 2026.

Toyota expects investments in property, plant and equipment, excluding vehicles and equipment on operating leases, to be approximately ¥2,300.0 billion during fiscal 2027. Toyota expects to sufficiently fund its cash requirements, including those relating to capital expenditures as well as its research and development activities, through cash and cash equivalents on hand, cash generated by operations and debt financing, such as the issuance of corporate bonds and borrowing.

Toyota is targeting global BEV sales of 3.5 million units by 2030. Toyota aims to achieve a game-changing BEV driving range of 1,000 km through next-generation BEVs. Toyota is developing a performance-oriented rectangular battery aiming to reduce costs by 20% compared with the earlier bZ4X and achieve a quick charge time of 20 minutes or less. Toyota is developing a popularization version of liquid lithium batteries aiming for a 20% increase in cruising range and 40% reduction in cost compared with the earlier bZ4X, as well as quick recharging in 30 minutes or less. Toyota is developing a high-performance version of the bipolar lithium-ion battery expecting a 10% increase in cruising range and a 10% reduction in cost, as well as a quick charge time of 20 minutes or less, aiming to commercialize this battery in 2027-2028. All-solid-state batteries are targeted for commercialization between 2027 and 2028. The next-generation (third-generation) fuel-cell unit currently under development aims to offer durability equivalent to twice that of the current generation, with fuel efficiency and driving range improved by 20%, with a plan to roll out starting in fiscal 2027. Toyota is developing large-scale electrolysis systems in the 5 megawatt to 20 megawatt range. From fiscal 2027, Toyota will begin production of a new model of fuel-cell commercial vehicle.

Toyota has initiated undertaking company-wide measures to address a significant rise in its break-even volume due to a combination of increases in investments in human resources and future-oriented investments and the impact of U.S. tariffs. Toyota will increase earnings by reviewing fixed costs, achieving cost improvements, and initiating sales initiatives in all regions, groups, and in-house companies. Toyota will encourage employees to reexamine their ways of working and pursue efficient, value-added work, including stepping up utilization of AI for routine tasks and low-value-added work. Toyota will focus on improving its break-even volume by ensuring that the benefits of reinforcing its operational foundations are steadily reflected in its earnings power.

Toyota has rigorously enhanced safety standards and quality requirements and secured additional capacity, which has stabilized production. Toyota is advancing the integrated planning of its full global lineup of next-generation BEVs and will transform its manufacturing approaches to eliminate processes as well as reduce investment and lead times while securing earnings and increasing sales volume. The new modular structure and self-propelling production and other automation technologies will halve the number of processes required. New approaches to manufacturing, combined with the use of digital twin technology, are expected to halve production lead times. Toyota is building a system that integrates vehicles, people, and infrastructure, enabling the prediction and prevention of accidents before they occur, with demonstrations already underway in Japan and China.

Toyota's research and development expenditures were approximately ¥1,522.8 billion in fiscal 2026. Total capital expenditures for property, plant and equipment, including vehicles and equipment on operating leases, were ¥6,059.7 billion in fiscal 2026. Toyota expects investments in property, plant and equipment, excluding vehicles and equipment on operating leases, to be approximately ¥2,300.0 billion during fiscal 2027. Toyota expects to contribute ¥34,336 million domestically and ¥18,488 million overseas to its pension plans in fiscal 2027.

Toyota faces headwinds from a significant rise in its break-even volume due to increases in investments in human resources and future-oriented investments and the impact of U.S. tariffs. The aggregate unfavorable impact of changes in expenses and expense reduction efforts includes the ¥1,380.0 billion impact of U.S. tariffs. Toyota faces risks from the transition to a lower-carbon economy, including changes in customer demand for vehicles due to changes in laws, regulations, and government policies relating to climate change. Toyota is subject to the risk of changes in customer demand for vehicles due to factors such as changes in laws, regulations and government policies relating to climate change, technological innovation to address climate change, and new entrants into the automobile industry. Toyota may incur significant costs and expenses as a result of the materialization of such risks, or in its efforts to mitigate or adapt to such risks.

Management's message emphasizes the transformation into a mobility company, guided by the Toyota Philosophy with a mission of 'Producing Happiness for All'. Key strategic priorities include advancing a multi-pathway strategy for carbon neutrality, focusing on product-centered and region-centered management, and improving the break-even volume through cost improvements and sales initiatives. Management has initiated company-wide measures to address the rise in break-even volume due to investments and the impact of U.S. tariffs, focusing on reviewing fixed costs, achieving cost improvements, and initiating sales initiatives. Toyota expects investments in property, plant and equipment, excluding vehicles and equipment on operating leases, to be approximately ¥2,300.0 billion during fiscal 2027.

Toyota's total revenues for fiscal 2026 were ¥50,684.9 billion ¹, compared to ¥48,036.7 billion ² in fiscal 2025. Net income attributable to Toyota Motor Corporation was ¥3,848.0 billion ³ in fiscal 2026, compared to ¥4,765.1 billion ⁴ in fiscal 2025. Operating income was ¥3,766.2 billion ⁵ in fiscal 2026, compared to ¥4,795.6 billion ⁶ in fiscal 2025. Net cash provided by operating activities was ¥5,472.9 billion ⁷ in fiscal 2026. Cash and cash equivalents were ¥12,659.6 billion ⁸ as of March 31, 2026. Total Toyota Motor Corporation shareholders' equity was ¥39,918.9 billion ⁹ as of March 31, 2026. Total borrowings were ¥43,494.3 billion ¹⁰ as of March 31, 2026. The average effective tax rate for fiscal 2026 was 22.7% ¹¹. For the automotive segment, operating income was ¥2,777.0 billion ¹² in fiscal 2026. For the financial services segment, operating income was ¥851.7 billion ¹³ in fiscal 2026.

The worldwide automotive market is highly competitive, and Toyota faces intense competition from automotive manufacturers, with competition likely to further intensify as technological advances in CASE technologies progress. Toyota's ability to adequately respond to rapid changes in the automotive market, particularly shifts in consumer preferences to electrified vehicles, is fundamental to its future success. Toyota is sensitive to fluctuations in foreign currency exchange rates, principally exposed to fluctuations in the value of the Japanese yen, the U.S. dollar, and the euro, and a strengthening of the Japanese yen against the U.S. dollar can have an adverse effect on operating results. Toyota is subject to various laws, regulations, and governmental actions related to vehicle safety, environmental matters, and tariffs; a significant increase in tariffs on exports to the United States, including tariffs specifically related to the automotive industry, were announced in 2025, and such elevated tariff rates remain in effect, increasing the cost of products and potentially causing stagnation in demand. Toyota's operations and vehicles rely on various digital and information technologies, which are subject to frequent attack, and cyberattacks are increasing in intensity, sophistication, and frequency, and Toyota has been and expects to continue to be the subject of such attacks.