Toyota Motor is on track to report its third consecutive quarterly drop in operating profit when it releases results on Friday, as surging raw‐material costs and U.S. import tariffs erode margins. Despite posting record global vehicle sales of 2.9 million units in the fiscal third quarter—a 4% increase year-on-year—and strong demand for its hybrid models, analysts forecast operating profit will fall by approximately 8% from the prior year period. The decline is driven by a 12% rise in commodity expenses, which added nearly ¥220 billion to cost of goods sold, and an estimated ¥50 billion hit from levies imposed on imported vehicles into the United States since mid-2024.

In a bid to bolster profitability and meet growing regulatory requirements for cleaner vehicles, Toyota has announced plans to lift production of hybrid and plug-in hybrid models to around 6.7 million units by fiscal 2028, up 30% from its 5.15 million‐unit target for 2026. The automaker intends to invest ¥1.2 trillion over the next four years in battery assembly lines and powertrain facilities at its Aichi and Kyushu plants. Toyota’s hybrid mix reached 38% of global sales in 2025, and management expects the expanded capacity to drive a 15% improvement in per-vehicle margin by 2029 as scale efficiencies and lower battery costs take hold.