Toyota resolved its vehicle certification issue in Japan that led to temporary production halts for certain vehicles and lower YoY vehicle production in 1H25. Management expects to return its vehicle production to a 10 mn unit annualized pace in 2H25. HEV sales growth in North America was constrained by production disruption at its Indiana plant and dealer inventories that are half the level of conventional vehicles. The improved production volumes and its focus on lower sales incentive spending is expected to improve profitability in 2H25, which enabled the company to affirm its FY25 consolidated operating profit guidance for the full year. Although profit is expected to decline 20% YoY, the company’s consolidated operating margin is projected to come in at a respectable 9.3%.

Toyota affirmed its FY25 financial guidance despite the H125 vehicle production disruption stemming from its certification issues in Japan. FY25 financial guidance that contemplates lower wholesales, higher consolidated revenue, and a 20% decline in consolidated operating income.

Consolidated vehicle sales are now expected to decline by less than 1% YoY, a change from its previous expectation for sales to increase by less than 1%. The new forecast includes expected vehicle sales growth in Japan (+2%) and Asia (+3%), partially offset by lower sales in North America (-3%) and Europe (-4%).

Toyota maintained its FY25 consolidated operating income forecast of ¥4.3 tn, which represents a 20% decline from ¥5.3 tn in FY24. The lower operating income was originally driven by a more challenging automotive industry environment, increased investments in its employees and suppliers, and an acceleration of investments in growth technologies, each of which was expected to account for roughly one-third of the decline.