Toyota Motor Corporation Q2 FY2026 earnings call

• Thanks to strong global customer demand, vehicle sales increased mainly in Japan and North America. Electrified vehicles ratio rose to 46.9% driven by strong HEV sales. • Raised interim dividend to JPY 45 per share and full year dividend forecast to JPY 95 per share. • Outlined 5 brands of the Toyota Group with clear directions to meet diverse customer needs. • New RAV4 adopted Arene platform for software development. • Addressed certification issues and capacity reinforcement, focusing on safety and quality while securing capacity. • Company-wide initiative to review allocation of people, materials, and capital to improve productivity and lower break-even volume.

Consolidated vehicle sales for the first half reached 4,783,000 units (105% of same period last year). Toyota and Lexus vehicle sales totaled 5,267,000 units (104.7% compared to previous fiscal year). Sales revenues were JPY 24,630.7 billion; operating income JPY 2,005.6 billion; income before income taxes JPY 2,478.1 billion; net income JPY 1,773.4 billion. Geographically, Japan's operating income decreased mainly due to exchange rate fluctuations and increased expenses; North America's decreased because of U.S. tariffs; other regions increased mainly due to higher sales volume and improved model mix; China business saw increased operating income and share of profit from equity method investments; Financial Services segment operating income increased largely due to an increase in loan balances.

• Consolidated vehicle sales remain unchanged from previous forecast; Toyota Lexus vehicle sales revised upward by 100,000 units to 10.5 million units. • Full year consolidated forecast: sales revenues JPY 49 trillion, operating income JPY 3,400 billion, income before income taxes JPY 4,180 billion, net income JPY 2,930 billion. • Adopted full year ForEx rate assumptions: JPY 146 per dollar and JPY 169 per euro.

• Impact of U.S. tariffs on operating income. • Potential impact of Chinese semiconductor shortfall on supply chain, with monitoring and research for alternatives ongoing.

Q: For the past several years, how have you raised your earning power with those efforts? And how has that been reflected in these Q2 results?

A: Kenta Kon answered that earning power comes from product competitiveness, value chain revenues, and response to U.S. tariffs, with Q2 results reflecting strong sales and value chain performance.

Q: Chinese semiconductors shift, what countermeasures?

A: Kenta Kon said they are monitoring the situation, researching alternatives, and closely watching the impact on the supply chain.

Q: View on North American market going forward and breakeven volume efforts?

A: Kenta Kon stated North American market has strong demand, and company is making all-out efforts to enhance value-add work, eliminate waste, and reduce breakeven volume.

Q: Hybrid growth outlook and BEV volume?

A: Kenta Kon expects hybrid growth to continue due to strong demand, and BEV volume is adjusted based on actual customer and market demand.

Q: Price pass-through of tariff costs?

A: Kenta Kon said Toyota aims to enhance product value instead of simply pricing out customers, and works with suppliers to overcome tariff impact.

Q: Fukuoka battery plan progress and tax outlook?

A: Ongoing study for Fukuoka battery factory, and JAMA advocates for favorable tax treatment to support domestic manufacturing.

Q: Japan Mobility Show impressions and tariff impact revision?

A: Kenta Kon was encouraged by customer response at the show, and tariff impact was recalculated due to revised tariff levels.

Q: U.S.-Japan tariff agreement view and stock price reaction?

A: Kenta Kon thanked for tariff agreement, and mentioned ongoing efforts for improvement, with neutral outlook on upward/downward revisions.

Q: U.S. investment plan and dealer network for other brands?

A: Kenta Kon said Toyota will make sizable investments in U.S., and considering selling U.S.-made cars in Japan, with no concrete plans for dealer network sales of other brands yet.

Q: Trump's $10B investment talk and Mexico parts replacement?

A: Kenta Kon didn't confirm $10B but noted sizable U.S. investment, and no concrete plans for Mexico parts replacement yet.

Q: Product competitiveness midterm view and production capacity in Japan?

A: Kenta Kon said product competitiveness will be maintained, and domestic production in Japan is safeguarded while balancing local production globally.

Q: Impact of tariffs on regional sales and Japan domestic production?

A: Takanori Azuma said balanced regional management helps mitigate tariff impact, and domestic production in Japan is protected to maintain manufacturing prowess.