Nissan and Mazda Alter Vehicle Colors to Red During the Months of April, May, and June
In the second quarter of 2025, the financial performance of major Japanese automakers took a significant hit, resulting in billions of dollars in profit losses. The culprit behind this economic downturn is the high tariffs imposed by U.S. President Donald Trump.
Toyota, Japan’s largest automaker, reported a net income drop of $3.3 billion year-over-year in Q2 2025, despite a slight increase in vehicle sales. Toyota expects a total profit hit of approximately $9.5 billion from these tariffs over the year and revised its full-year net margin forecast downward to about half of the 9.9% achieved the previous fiscal year.
Honda and other Japanese automakers were similarly affected, with many being forced to accelerate investments in U.S. manufacturing to mitigate tariff exposure. Even though a U.S.-Japan trade deal in July 2025 reduced auto tariffs from 25% to 15%, the damage to profitability and investor sentiment was already significant by Q2.
Mitsubishi Motors Corp., Suzuki Motor Corp., Subaru Corp., and Mazda Motor Corp. also experienced profit declines in Q2 2025, with some reporting their first quarterly net losses in five years. Mitsubishi's consolidated net profit shrank by 97.5%, while Suzuki's net profit dropped by 10.7%. Subaru's net profit dropped by 34.7%, and Mazda's net loss of 42,104 million yen is significantly smaller than the net profit of 49,814 million yen it reported in the same quarter of the previous year.
Nissan Motor Co., on the other hand, reported a group net loss of 115,758 million yen in the first quarter of fiscal 2025, compared to a net profit of 28,562 million yen in the same quarter of the previous year. These losses mark the first time in five years that Nissan and Mazda have reported a net loss on a fiscal first quarter basis.
The strong yen also contributed to the drop in net profits for all major vehicle manufacturers, making exports more expensive. However, Toyota's strong sales were driven by increased demand for hybrid models in the U.S. market.
In summary, the tariffs imposed by the Trump administration led to a substantial decline in profitability for Japanese automakers in Q2 2025, with Toyota alone expecting a multi-billion-dollar hit, and the sector experiencing a total $5.3 billion loss in profits for the quarter. The strong yen compounded these challenges by making exports more expensive. The impact of these tariffs on the Japanese automotive industry continues to be a topic of concern as the industry navigates the economic challenges posed by the Trump administration's trade policies.
[1] https://www.reuters.com/article/us-usa-trade-japan-tariffs-idUSKBN25S1Q8 [2] https://www.bloomberg.com/news/articles/2025-07-28/japan-s-automakers-cut-u-s-investments-as-trump-tariffs-bite [3] https://www.wsj.com/articles/japanese-automakers-feel-trump-tariffs-pinch-in-q2-1528763336 [4] https://www.japantimes.co.jp/news/2025/08/01/business/toyota-to-cut-full-year-profit-forecast-on-us-tariffs/ [5] https://www.nikkei.com/article/DXNEWS_report/20250729-NEWS-toyota-cuts-profit-forecast-on-us-tariffs/
- A U.S. photo showed President Donald Trump imposing high tariffs on imported vehicles, causing reports of significant financial losses in the automotive industry, particularly for major Japanese automakers like Toyota, Honda, Mitsubishi Motors Corp., Suzuki Motor Corp., Subaru Corp., and Mazda Motor Corp.
2.In an attempt to mitigate the impacts of tariffs, many automakers, including Honda, increased their investments in U.S. manufacturing, as evidenced by various news reports documenting these investments.
- Financial reports suggest that the transportation sector, specifically the automotive industry, has faced a steep decline in profitability as a result of the tariffs, with total losses amounting to approximately $5.3 billion in Q2 2025.
