Analysts forecast Toyota Motor will report its third consecutive quarterly drop in operating profit when it releases results this Friday. Consensus estimates point to a year-on-year decline of approximately 12%, driven largely by elevated raw-material costs and the impact of U.S. import tariffs on key components. Despite selling a record 2.9 million vehicles globally in the quarter, Toyota’s cost of goods sold has risen by an estimated ¥400 billion compared with the same period last year, squeezing margins in its core auto division.

Toyota achieved an unprecedented global sales figure of 2.9 million vehicles in the fiscal first half, reflecting robust consumer demand across North America, Europe and Asia. Hybrid models accounted for 45% of total volume, up from 38% a year earlier. In the U.S., hybrid sales grew 22% sequentially, helped by the recent launch of the new Prius and RAV4 Hybrid. Management attributes this performance to expanding model line-ups and improved supply-chain resilience despite ongoing semiconductor shortages in some markets.

Looking ahead, Toyota has set a target to increase hybrid and plug-in hybrid vehicle output to approximately 6.7 million units by fiscal 2028, a 30% uplift from its current guidance for 2026. The plan involves expanding production capacity at key plants in Japan, North America and Thailand, with an additional 200,000 units of hybrid transaxle assembly expected to come online by mid-2027. This strategic push underscores Toyota’s commitment to electrified powertrains as it seeks to offset margin pressures and meet tightening global emissions regulations.