Honda Motor Co., based in Tokyo, reported a 24.5% decline in profit for the fiscal year ending in March, primarily due to a drop in vehicle sales in China. The Japanese automaker also cautioned that tariffs enforced by former President Donald Trump could further negatively impact their earnings.
Despite initial discussions earlier this year, Honda abandoned plans to integrate its operations with fellow Japanese automaker Nissan Motor Corp. The companyโs annual profit was reported at 835.8 billion yen (approximately $5.6 billion), a decrease from the previous yearโs 1.1 trillion yen. However, Hondaโs annual sales experienced a 6.2% increase, reaching nearly 21.69 trillion yen (approximately $147 billion).
While Honda witnessed record global motorcycle sales exceeding 21 million units, research and development expenses posed significant financial challenges. Hybrid vehicle sales thrived, particularly in the United States, and Honda observed an improvement in profitability per vehicle, attributing this success to its popular models like the Accord sedan and CR-V sports-utility vehicle.
Executive Vice President Noriya Kaihara admitted that Trumpโs tariffs would likely have an adverse effect, ultimately eroding 650 billion yen ($4.4 billion) from Hondaโs operating profit by the fiscal year concluding in March 2026. This impact is largely driven by U.S. tariffs on vehicles imported from Canada and Mexico. However, Hondaโs vehicle shipments from Japan to the U.S. remain minimal.
Despite acknowledging these challenges, company officials emphasized the importance of delivering realistic projections, regardless of their potentially negative implications. CEO Toshihiro Mibe expressed Hondaโs commitment to mitigating the impact of tariffs by potentially relocating auto production to U.S. facilities and re-evaluating their investment strategies, stressing that all decisions would be made with careful consideration. Mibe also noted Hondaโs continued commitment to producing more electric vehicles.
Various automakers have expressed confusion over Trumpโs opposition to electric vehicles and his tariff policies, leading some to scale back ambitious electrification plans. Honda forecasts a 70% plunge in profits for the fiscal year ending March 2026, with anticipated earnings of 250 billion yen ($1.7 billion) and sales projected at 20.3 trillion yen ($137 billion), depicting a 6% decline.
In a separate development, Honda and Nissan announced plans in December to establish a joint holding company, with Mitsubishi Motors Corp., another Japanese automaker, considering joining the alliance. However, the plans quickly dissolved when Nissan expressed concerns about being placed at a disadvantage and decided to withdraw. Nissan, currently facing financial difficulties, is expected to release its financial results later in the day.