Toyota expects $4.3 billion hit, blame it on Middle East conflict

is expecting fallout from the Middle East conflict to cost it around $4.3 billion in FY27. The world’s largest automaker said on Friday, in one of the biggest warnings yet on the impact of the crisis on global companies. The Japanese auto giant has reported an almost 50% drop in its quarterly earnings, Reuters has reported. The company further stated that it expects full-year profit to decline by a fifth in this financial year, as rising costs and supply snarls from the war outweighed surging demand for hybrid vehicles.

The global auto industry, along with other key sectors, has already been grappling with the US tariffs. Besides that, Toyota is under pressure due to the rapid rise of the Chinese automakers. The latest surge in energy prices heaps further pain to these challenges for the OEM.

Last week, Toyota stated that its sales in the Middle East, which is a key region for the brand, dropped sharply in March 2026, after shipments to the region were disrupted.

This outlook of FY27 sales, earnings, and profit is the first issued by Toyota under the company’s CEO Kenta Kon, who faces the challenge of steering the automaker through the impact of US President Donald Trump’s tariffs, which cut the company’s operating profit in FY26 by 1.4 trillion yen.

Toyota CEO Kon said that it’s not about stepping on the brakes completely, but about identifying waste one by one and changing structures piece by piece, carrying out reform. He praised Toyota’s ability to deliver nearly 3.8 trillion yen in operating profit in the financial year that just finished, despite significant changes in the operating environment.

Source