Toyota has disclosed a £3bn blow linked to the war in Iran, as rising parts and raw material prices combined with falling sales to squeeze earnings.

The world’s largest carmaker said profit declined in the financial year to March, warning it was “unlikely to fully absorb the additional impact from the Middle East” — one of the clearest signs yet of how the conflict is weighing on global businesses.

The Japanese manufacturer’s biggest setback was a 400bn yen (£1.9bn) surge in materials costs tied to the war, alongside a further 270bn yen hit from weaker sales.

Toyota remains the leading automotive brand across the Middle East.

Operating profit fell to 3.8tn yen for the year to March, while tariffs introduced by Donald Trump reduced earnings by 1.38tn yen.

US-Israeli strikes on Iran and the subsequent closure of the Strait of Hormuz have disrupted global industry.

Donald Trump, facing political pressure over rising gasoline prices in the US, has said a deal to reopen the waterway is under consideration, although Iranian officials have given no sign they are willing to agree.

Asian manufacturers have been hit especially hard due to their heavier dependence on Gulf exports, many of which have been stranded since the conflict began.

Japan’s automotive industry lobby group, for example, said 70 per cent of the country’s aluminium imports come from the Middle East.

Higher oil prices have also pushed up tyre production costs.

Toyota said it expects profits for the year to March 2027 to fall for a third consecutive year as the war continues to weigh on performance.

The company forecast operating profit of 3tn yen (£14bn) for the coming year, a decline of more than 25 per cent.

Toyota’s chief accounting officer,
Takanori Azuma, said, “We do not believe we can fully offset negative 670bn yen Middle East impact.”