Toyota is forecast to report its first increase in operating income in six quarters on Thursday, according to analysts. Reuters reports the median estimate of nine analysts surveyed by LSEG puts operating profit for the July-September quarter up 18% to 992 billion yen ($6.3 billion). Revenue is predicted to rise 8% to 13.4 trillion yen.
The forecast reflects a weaker yen and strong demand for Toyota's more profitable hybrid vehicles. The absence of US tariff-related costs that hit earnings a year earlier also helps, according to the report.
Global sales of Toyota and Lexus vehicles fell 4% to just over 2.5 million units in the period. Sales dropped 22% in China and by one-third in the Middle East. Electrified vehicle sales in North America rose more than 30% to almost 430,000 vehicles. Overall US sales volumes rose less than 1%.
Yuya Takahashi, an analyst at Marusan Securities, said: "With gasoline prices rising, there is demand for more fuel-efficient hybrids. The key is how many of those more profitable hybrids are being sold."
Reuters reports that Toyota's China performance is likely to remain a key concern for investors. Domestic brands are competing fiercely in China during a rapid shift to EVs, which the report says challenges Toyota's gasoline-powered and hybrid-heavy lineup. Denso, a Toyota supplier, reported a more than one-third drop in operating profit in Asia for the six months through September, hit by weaker vehicle sales in China and higher material costs.
Toyota has estimated it could cost 1 trillion yen annually from 2028 to modernize its factories as it expands automation and robotics. Investors will also watch its investments in factory automation, vehicle software and autonomous driving.