Toyota And Honda Profits Are Expected To Drop, This Is The Trigger

All-New 2026 RAV4 Plug-in Hybrid. (Photo: Toyota USA)

JAKARTA - The global automotive world is highlighting two Japanese giants, Toyota and Honda. Both are expected to report on a significant weakening first-quarter revenue, a concrete overview of the pressures they face due to global market uncertainty.

According to analysts' estimates, Reuters reported Tuesday, August 5, Toyota Motor as the world's best-selling automaker is projected to record a 31 percent decline in operating profit. This will be the manufacturer's weakest quarterly result in more than two years. Meanwhile, Honda Motor is expected to experience a deeper decline, with operating profit expected to drop by 36 percent, marking a second consecutive quarter decline.

This decline was largely due to two main factors: US import rates and strengthening yen currencies. Although the two companies got a bit of fresh air from the bilateral trade deal that reduced Japanese car import rates from a total of 27.5 percent to 15 percent, the impact of this pressure is still very pronounced.

However, in the midst of these challenges, there is a glimmer of hope. Demand for hybrid vehicles remains strong, especially in the US market. This is a savior for Toyota, which recorded a 6 percent increase in global sales in the first half of this year, supported by the popularity of hybrid models such as Camry and Sienna.

Unlike Toyota, Honda had to face a 5 percent decline in global sales dragged by the weakening markets in China, Asia, and Europe. In response to this situation, Honda has taken strategic steps by shifting focus from electric vehicles (EVs) to hybrid, and even delaying plans to build an EV production base in Canada.