Japan's biggest carmakers see profits stalling at half their peak level as the Iran war drags on

According to forecasts compiled by Nikkei Asia from the seven largest Japanese automakers — Toyota, Honda, Nissan, Suzuki, Mazda, Subaru and Mitsubishi Motors — combined operating profit for fiscal 2026 is set to land at around half of the recent peak. The main driver is the supply-chain and energy shocks generated by the Iran war. Slower shipments of semiconductors and plastic feedstocks have tightened assembly schedules.

Japan's heavy reliance on Middle Eastern and Indian Ocean shipping routes means the disruption around the Strait of Hormuz has fed directly through to carmakers. Honda's announcement of its first annual loss in 70 years prompted rivals to trim guidance during the year. The yen's volatile path against the dollar has become both a support to export profits and a source of forecasting noise.

The industry is accelerating efforts to diversify production sites and supplier bases. Toyota's announced two-billion-dollar new assembly plant in Texas is one concrete step. Companies still want to push ahead with electrified and hybrid models, but margins on full-battery models are likely to stay tight in the short term. Investors say the second-half earnings picture will depend on where the yen and crude oil sit in coming months.