Seven Japanese Automakers Face Triple Whammy as U.S. Tariffs Hit ¥2.5 Trillion
Semiconductor supply risks and slowing Asian markets add further pressure on profits through FY2026
Japan’s automobile industry is facing a triple whammy from U.S. tariffs, semiconductor supply disruptions, and intensifying competition across Asian markets. The impact of U.S. tariff measures on seven major passenger car manufacturers is expected to reach approximately ¥2.5 trillion for the fiscal year ending March 2026, putting significant pressure on profitability.
Adding to the uncertainty, shipment suspensions by Dutch semiconductor manufacturer NEXPERIA have raised concerns over stable parts procurement. Meanwhile, sluggish sales caused by fierce competition in China and other Asian markets continue to weigh on overall performance.
On November 10, Japan’s seven major automakers released their consolidated earnings forecasts for the fiscal year ending March 2026, with six companies, including Toyota, projecting lower operating profits and Nissan expecting an operating loss. Combined operating profit is forecast at ¥4.495 trillion, about 40% lower year-on-year.
Honda Motor Co. and Mitsubishi Motors have revised their forecasts downward, while Toyota revised its outlook upward, though it still anticipates a year-on-year decline in operating profit.
The primary factor behind the earnings deterioration is the impact of U.S. tariffs introduced under the Trump administration. Although demand for automobiles in the U.S. remains solid, automakers have been reluctant to fully pass tariff costs on to consumers, leading to profit erosion rather than volume declines.
Although an agreement to reduce tariff rates was reached in July, implementation was delayed by about six weeks until September 16. Mazda Chief Financial Officer Jeffrey H. Guyton commented, “The delay in reducing tariff rates compared to our expectations has resulted in a deficit.” As elevated tariffs become entrenched, Subaru has launched its “Cost Revolution 20–30” initiative, aiming to cut costs by ¥200 billion by 2030 to counter the impact of U.S. tariff measures, according to President Atsushi Osaki.
Automakers are also grappling with semiconductor supply disruptions related to trade tensions between China and the Netherlands. While the Chinese government has announced plans to ease export restrictions, uncertainty remains, underscoring the need to strengthen supply chain resilience.
Honda, which plans to suspend vehicle production in Mexico from late October, is considering alternative sourcing strategies. Executive Vice President Noriya Kaihara stated, “We are proceeding to ensure production can resume during the week of November 21.” Nissan has decided to scale back production at its Oppama Plant in Kanagawa Prefecture and Nissan Motor Kyushu in Fukuoka Prefecture, though President Ivan Espinosa said the company is “making efforts to minimize the impact.” Mitsubishi Motors also expects supply-related effects to emerge from mid-November and is working to secure alternative components.
Toyota Executive Officer and CFO Kenta Kon said, “We have not seen any immediate impact, but we recognize the risks and are monitoring the situation closely.” Suzuki Executive Vice President Naoki Ishii added, “We will work as a team to ensure production is not affected.”
On the demand side, global vehicle sales remain sluggish due to intensifying competition and a challenging market environment. Toyota is the exception, having raised its global sales forecast for the fiscal year ending March 2026 on the back of stronger sales in Japan and North America. Most other automakers expect sales to fall short of last year’s levels, particularly in China and other Asian markets.
During the April–September 2025 period, Honda’s vehicle sales in Asia—especially China—fell 18.6%, Nissan’s sales in China declined 17.6%, and Mitsubishi Motors’ sales in ASEAN markets dropped 9.7%.
Honda has also lowered its full-year sales volume target due to semiconductor shortages and revised down its earnings forecast. Mitsubishi Motors has similarly reduced its sales outlook and earnings expectations. President Takao Kato stated that the company plans to suspend operations at its third plant in Thailand from mid-2027, implementing “necessary structural reforms to ensure profitability.”
Source: Nikkan Kogyo Shimbun
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