Toyota warned of a $4.2 billion financial hit from the Middle East conflict, citing higher parts prices and lost sales. The world’s largest automaker revealed the turmoil would slash net profit by 22% to ¥3 trillion, marking its third straight annual decline. Takanori Azuma, Toyota’s accounting chief, stated the company cannot fully offset the ¥670 billion regional impact, which includes surging costs for aluminum and rubber tires.

This follows a ¥1.4 trillion burden from U.S. tariffs that already pressured profits. Kenta Kon, new CEO, pledged stricter cost controls to restore profitability amid slowing sales. Despite record 10.5 million vehicles sold last year—fueled by U.S. hybrid demand—Middle East sales plummeted 32% in March. EV sales are rising globally, but geopolitical tensions and inflation have eroded profitability from a ¥4.9 trillion peak. Shares fell 1.9% post-announcement, down 13% year-to-date.