(Nov 5): Toyota Motor Corp shares climbed the most in nearly four decades after the automaker, emboldened by strong demand for its hybrid vehicles, raised annual profit forecast and stepped up shareholder returns.
The world’s largest carmaker raised its operating income forecast by 15% to ¥3.9 trillion (RM99 billion) for the fiscal year ending March 2027, it said on Thursday. For the three months ended September, earnings rose 34% to a higher-than-estimated ¥1.1 trillion, the first gain in six quarters.
Coupled with an expansion of its buyback programme, the bullish outlook helped ease concerns about slumping demand in China, the war in Iran and US tariffs.
Toyota jumped more than 16% in Tokyo, the biggest gain since 1987. The stock had already been up ahead of earnings on investor optimism that President Donald Trump’s tariffs could be eased after Democrats swept the midterm elections. But the strong results supercharged the gains.
Toyota’s financial resilience is remarkable given all the headwinds it faces, said Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. “Compared with other Japanese automakers, Toyota has relatively few obvious weaknesses,” he said.
Toyota expanded its buyback programme to as much as ¥1.3 trillion in stock, and the carmaker is allocating as much as ¥14 trillion for shareholder returns over the next five years.
Mitsui Sumitomo Insurance Co, Aioi Nissay Dowa Insurance Co, Tokio Marine & Nichido Fire Insurance Co and Sompo Japan Insurance Inc have agreed to tender their shares.
Cost reductions helped reduce the effects of rising material costs and the prolonged conflict in the Middle East, said chief accounting officer Takanori Azuma.
Still, “competition from Chinese automakers remains a major challenge, not only in China but increasingly in overseas markets as well,” BI’s Yoshida said.
The Toyota group’s annual sales target was reduced to 10.99 million units, compared with its previous forecast for 11.18 million.
The outlook was downgraded as Toyota faces an ongoing slump in China, where foreign brands have continued to lose ground to local manufacturers led by BYD Co. The outlook for that market isn’t bright, with the Passenger Car Association estimating industry sales there to tumble 22% this year before inching up 2% in 2027.
Earlier this week, Toyota said it’s planning to debut the next generation of its popular Corolla in China. Executives have also hinted at making an all-electric variant, which would be a major pivot for the world’s best-selling car of all time.
Toyota is trying to reverse the tide by building a new factory in Shanghai, where it will produce EVs under the Lexus brand beginning in late 2027.
Production will begin in September and the goal will be to reduce development time to 18 months, chief financial officer Yoichi Miyazaki said.
Separately, the Japanese carmaker also announced a series of organisational changes on Thursday, including the creation of a new division focused on robotics.
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