Honda Motor Co. reported a cumulative operating loss of 166.4 billion yen ($1.07 billion) in its automotive business for the period from April to December 2025, resulting in a negative operating margin of 1.6%.
The Japanese automaker attributed the losses to US tariff impacts and restructuring costs linked to its EV business, which alone amounted to 267.1 billion yen ($1.7 billion).
Honda is the latest company to report multi-billion-dollar losses tied to a shift in its EV strategy, following Detroit rivals Ford ($20 billion), General Motors ($6 billion), and Stellantis ($26 billion).
“Our current challenge is to build a lean operating structure that can respond flexibly to changes in the business environment,” Executive Vice-President Noriya Kaihara said at an earnings briefing.
According to Kaihara, Honda will communicate its “review of fundamental medium- to long-term strategy at an appropriate timing.”
EV Strategy Shift
Managing Executive Officer and Chief Financial Officer Eiji Fujimura said on Tuesday’s earnings call that, excluding the EV-related write-down, internal combustion engine (ICE) and hybrid vehicle (HEV) results have shown profit for the company.
On the other hand, he flagged issues regarding EV adoption, including “less stringent environmental regulations in different markets” and the “retreat of multilateral free trade systems due to protectionist policies.”
Additionally, he flagged a “heightened supply chain risk to expansion of global procurement, further exacerbated by intensifying global competition from emerging OEMs.”
Last May, Honda announced it was scrapping its plan to have 30% of its global vehicle sales be electric vehicles by 2030, as it scaled back its electrification strategy.
It had formerly pledged to invest 10 trillion yen ($64.4 billion) through the fiscal year ending in 2031, however, it was reduced to 7 trillion yen ($45.1 billion).
Honda called the decision “a switch in the planned course,” due to uncertainty in the auto industry, namely regarding the EV market.
By then, Chief Executive Officer Toshihiro Mibe said the automaker would be “more aggressive” in producing hybrids instead, according to AP News, while it maintains its focus on the motorcycle business “as its core strength.”
Lower Profits
In Japan, companies report results by fiscal year, which differs from the calendar year. The third quarter covers the period from September 1 to December 31.
While Honda achieved an operating income of 153.4 billion yen ($987 million) in the latest quarter, beating analyst estimates, its net income fell 42.2% year-over-year in the nine months to December.
The automaker posted an overall operating profit of 591.5 billion yen ($3.8 billion) during the same nine months, aided by its motorcycle business, for which strong profits helped offset weaker performance in the car division.
Still, it represented a 48.1% plunge from a year before.
Honda’s profit before income taxes dropped 37.0% year-on-year to 771.7 billion yen ($5 billion), while net income attributable to shareholders fell 42.2% to 465.4 billion yen ($3 billion).
Guidance
The company has reaffirmed its forecast of operating profit reaching 550 billion yen ($3.5 billion) by the the end of fiscal year 2026, on March 31.
The figures represent a 54.5% plunge from the 1.21 trillion yen ($7.8 billion) recorded in fiscal year 2025, which ended just a few days before the Trump Administration announced the new tariff scenario — one of the reasons Honda flags for the profit drop.
The automaker first released its forecast for FYE2026 last May. By then, it fell short of analysts’ expectations, who had anticipated a rise to 1.35 trillion yen.
According to Honda, a “wide range of efforts” was undertaken to mitigate the impact of U.S. tariffs, including collaboration with suppliers.
As a result, the company was able to reduce the impact from an initially forecasted 450 billion yen to 310 billion yen.
The US remains Honda‘s top market, accounting for more than two-fifths of its global sales over the last nine months.
The company expects to have delivered 21.3 million motorcycles and 3.34 million vehicles between April 1, 2025, and March 31, 2026, with a revenue of 21.1 trillion yen ($136 billion), 2.7% below FYE2025.
