PNN – The consequences of the war have now reached the shores of Japan, confronting the global automotive industry with a multi-layered crisis.
According to the report of Pakistan News Network, Toyota, the world’s largest automaker, warned in a shocking report that the consequences of the Iran war will cost the company $4.3 billion in the current fiscal year. Some of the highlights of the report are as follows:
- Quarterly profit plunges 50%
Toyota on Friday reported that its quarterly profit had almost halved. According to forecasts, the company’s full-year profit will also fall by 20% due to soaring war-related costs. This was described as Toyota’s weakest performance in three years.
- High raw material prices and production disruptions
Takanoori Azuma, head of Toyota’s accounting group, said most of the 670 billion yen ($4.3 billion) loss was due to higher prices for raw materials, fuel costs, transportation costs and even chemicals such as car paint as a result of the war against Iran. Delays in parts deliveries and a drop in sales volume are also among the other blows the war has taken on the Japanese automaker.
- The rush to hybrid cars
Interestingly, the increase in fuel prices due to insecurity in the Persian Gulf has greatly increased the demand for fuel-efficient cars. Toyota predicts that sales of its hybrid cars will exceed 5 million units for the first time; but even this popularity cannot compensate for the pressure of infrastructure costs of the war.
- Trump’s Tariffs
Kenta Ken, Toyota’s new CEO, takes over as the company grapples with the energy crisis caused by the Iran war and the legacy of Donald Trump’s tariffs, which cost Toyota 1.4 trillion yen last year.
- Middle East Market Paralyzed
Toyota officially announced that its sales in the Middle East region plummeted in March due to severe disruptions to shipping lines and shipments. The shutdown of traffic in the Strait of Hormuz effectively disrupted the company’s access to one of its key markets.
- Conclusion
Toyota’s warning shows how the fallout from the Iran war has now reached Japan’s shores, presenting the global auto industry with a multi-layered crisis. Toyota’s 2.2% drop in share price following the report reflects the market’s deep pessimism about the industry’s medium-term future in the shadow of the war.