---
endpoint: analytics
pattern: Autos
status: done
latency_ms: 170624
conversation_id: deb7cf9e-ed19-484d-8714-c813b5e3bced
citations: 11
created: 2026-05-31 20:43:43Z
---

# Is CLSA incrementally more positive/negative on Toyota Motor. If so, why?

## CLSA on Toyota Motor (7203 JP): Incrementally More NEGATIVE

**Bottom line**: CLSA has become **materially more negative** on Toyota over the last 18 months. Analyst Christopher Richter has downgraded the stock twice in a five-week window in 2025 and continued to refine bearish arguments since. The rating now sits at **U-PF (Underperform)** with a **¥2,500 target price** — roughly **7% downside** from the 3 June 2025 close of ¥2,675 [8].

### Rating Trajectory (from CLSA's own coverage history)

| Date | Rating | TP (¥) | Title / Catalyst |
|---|---|---|---|
| 6 Feb 2024 | **BUY** | n/a | "The hybrid edge" |
| 8 May 2024 | O-PF | n/a | "Slowing to a jog" (downgrade from BUY) |
| Jul–Dec 2024 | O-PF | n/a | "Following our own star", "Turbulent day", "Sales volume shortfall", "Forgiving", "Passing through Trump tariffs" |
| 3 Feb 2025 | O-PF | n/a | "Tariff burden" |
| 5 Feb 2025 | **HLD** | n/a | "Finally guidance lifted" (downgrade from O-PF) |
| **27 Mar 2025** | **U-PF** | **2,500** (from 3,000) | "Dropping the bomb early" (downgrade from HLD) [1][3] |
| 8 May 2025 | U-PF | 2,500 | "Erratum: Only two months?" (maintain) [4][7] |
| **3 Jun 2025** | **U-PF** | **2,500** | "Mixed reaction" — latest view (maintain) [8] |

The arc is unambiguous: **two rating cuts inside 50 days (HLD → U-PF on 27 March; previously O-PF → HLD on 5 February)**, with the target price slashed 17% from ¥3,000 to ¥2,500 [3]. CLSA's recommendation history table in the latest note explicitly logs the 27 Mar 2025 U-PF, 2,500 entry [8].

---

### Why CLSA Turned More Negative — Three Reinforcing Reasons

**1. Trump's 25% auto tariff is structurally bearish for Toyota's mix.**

The 27 March downgrade was triggered by Trump's announcement of 25% tariffs on all imported autos into the US. CLSA's framework: tariffs would lower US SAAR from 16.1m units and push average vehicle pricing up ~12.9% [1]. Toyota is disproportionately exposed because **23% of its US sales (~510k units) come from Japan, ~15% (330k) from Canada, ~6% (130k) from Mexico, and only ~57% are US-built — and critically, ~82% of Lexus (its highest-margin vehicle) is imported from Japan or Canada** [9]. So even if Toyota offsets tariffs with industry-wide pricing, the volume hit lands disproportionately on its premium mix.

**2. CLSA's earnings cut is far below management and consensus.**

CLSA forecasts FY3/26 operating profit at **¥3.16tn — down ~34% YoY, 42% below their own prior estimate, and 38% below Street** [2]. The follow-up financials table puts CLSA's FY3/26 EPS at **¥151.1 vs. consensus implied ~¥320** (CL/consensus EPS% = 47%) — meaning CLSA's numbers are roughly **half of Street** [11]. On those numbers Toyota trades on ~19x next year's earnings, which CLSA explicitly calls "not a particularly cheap level for an automaker" [3].

**3. Toyota's own FY3/26 guidance is described as "non-conservative" — a rare jab.**

Toyota's May 8 FY3/26 guide called for a 21% OP decline to ¥3.8tn, well above CLSA's ¥3.16tn. The fine print: **Toyota assumed only TWO MONTHS of tariff impact (April + May, ¥180bn)** [4]. CLSA flags this as out of character ("We cannot recall Toyota publishing this non-conservative of a forecast" [4]) and notes that expanding the tariff impact to a full 12 months drags Toyota's guidance down to ~¥2.9tn — essentially converging on CLSA's bearish print [5]. The ¥145/USD FX assumption and forecast of rising North American volumes in a price-hike environment are also flagged as aggressive [5].

A secondary tell: **Toyota disclosed there is no budget for a new buyback at this time** (after last year's ¥1tn buyback). CLSA reads this as "perhaps reveals management's doubts about their FY3/26 outlook" [6].

---

### The Latest Note (3 June 2025) — Toyota Industries Unwind: "Lukewarm"

The most recent CLSA note responds to the Toyota Industries (Tico) privatisation. CLSA's read [8]:

- **Positive**: A **~¥3.1–3.2tn buyback** of Toyota Motor shares from Tico is the headline good news.
- **Negatives**: Toyota receives only ~¥994bn for its Tico stake at a 27% discount to spot (vs. ¥16,300 minority tender, vs. ¥18,400 close); the new Tico owner is the unlisted Toyota Fudosan ("the black box"); Akio Toyoda's mere ¥1bn personal contribution; ¥700bn still being put into non-voting preferred shares; lack of IP clarity on bipolar battery tech.
- **Net cash outlay** for Toyota Motor is ~**¥2.9tn**, and CLSA concludes: *"We are lukewarm on the details of this deal, and believe Toyota is at risk of missing its FY3/26 guidance. We rate Toyota Motor an Underperform"* [8].

### Catalysts CLSA Is Watching

Catalysts that would validate the U-PF call [3][7]:
- Market conviction that tariffs are here to stay
- **Consensus EPS coming down** toward CLSA's number
- **Toyota guidance cuts through FY3/26** as the two-month tariff assumption rolls off
- Toyota missing its FY3/26 guidance outright [8]

---

### Synthesis Table — Why the Stance Has Drifted Negative

| Driver | Direction vs. 2024 | CLSA's New View |
|---|---|---|
| US auto tariff regime | New negative | 25% tariffs → structural margin/volume hit, esp. Lexus [1][9] |
| FY3/26 OP forecast | Cut sharply | ¥3.16tn (-34% YoY), 47% of consensus EPS [2][11] |
| Management credibility | Weakened | First "non-conservative" guidance CLSA can recall [4][5] |
| Capital return | Lukewarm | Tico buyback positive, but at a discount with strings attached [8] |
| Valuation | Stretched on new numbers | 19x FY26 EPS with rising risk [3] |
| Stock action | Confirming | -19.9% 12M absolute, -20.1% relative to Topix as of 3 Jun 25 [8] |

---

### Note on Coverage Source

All of the above comes from **CLSA parent** (analyst Christopher Richter, christopher.richter@clsa.com, Tokyo) — not the CLST Taiwan affiliate. This is the genuine "CLSA view" on a Japan-listed name. Latest doc in the corpus is dated **3 June 2025**; CLSA syncs are not real-time, so "latest" is relative to that vintage.

---

**Sources**
- [1][2][3][9] *Toyota Motor – U-PF (Dropping the bomb early)* — CLSA, 27 March 2025 — 607954231LinqAlpha.PDF
- [4][5][6][7][10] *Toyota Motor – U-PF (Erratum: Only two months?)* — CLSA, 8 May 2025 — 607958577LinqAlpha.PDF
- [8][11] *Toyota Motor – U-PF (Mixed reaction)* — CLSA, 3 June 2025 — 607961140LinqAlpha.PDF

## Citations

- [1] **607954231LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954231LinqAlpha.PDF>
- [2] **607954231LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954231LinqAlpha.PDF>
- [3] **607954231LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954231LinqAlpha.PDF>
- [4] **607958577LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958577LinqAlpha.PDF>
- [5] **607958577LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958577LinqAlpha.PDF>
- [6] **607958577LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958577LinqAlpha.PDF>
- [7] **607958577LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958577LinqAlpha.PDF>
- [8] **607961140LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961140LinqAlpha.PDF>
- [9] **607954231LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954231LinqAlpha.PDF>
- [10] **607958577LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958577LinqAlpha.PDF>
- [11] **607961140LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961140LinqAlpha.PDF>

