Summary
- Q3 operating profit falls 61%, missing forecasts
- U.S. tariffs, EV writedowns drag auto business into April-Dec loss
- North American EV slowdown and China competition weigh
- Honda maintains full‑year outlook despite EV‑related risks
TOKYO, (Reuters) – Honda Motor posted a 61% drop in third-quarter profit on Tuesday, hit by U.S. tariffs and restructuring costs tied to its electric-vehicle business, becoming the latest automaker to rack up fresh EV losses as demand for the technology cools.
The company’s grim results follow warnings from global automakers including Ford and Stellantis which have recently flagged massive writedowns related to their EV operations.
Demand for the technology has weakened in markets such as the United States, where buyers are increasingly choosing lower-priced cars as well as gasoline-electric hybrid models, an area long dominated by Toyota.
While Honda has never been an EV powerhouse, it said its automobile business slipped into a loss over the nine months ended in December due to one-off EV-related costs, including asset writedowns, alongside the impact of tariffs.
“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.
Japan’s second-biggest automaker reported operating profit of 153.4 billion yen ($987.07 million) for October-December, down 61.4% year-on-year and missing the 174.5 billion yen average forecast from nine analysts polled by LSEG.
The company said the EV market in North America had turned sharply negative as incentives faded and demand slowed, cutting operating profit for the nine-month period by nearly 270 billion yen.
U.S. tariffs pulled results down by a further 280 billion yen for that period, it said. The U.S. remains Honda’s top market, accounting for more than two-fifths of its global sales over those nine months.
The company’s announcement comes after other automakers signalled they are pulling back from EVs after misjudging the speed of adoption.
Stellantis said last week it would take 22.2 billion euros ($26.5 billion) in charges as it scales back its EV ambitions, following similar writedowns at Ford and General Motors.
HONDA’S EV CHALLENGES EXTEND BEYOND NORTH AMERICA
Executives said the company also incurred EV-related costs in China, the world’s largest auto market and still Honda’s second-biggest, though its sales in the rapidly electrifying market have been struggling for years.
Honda is lagging local players in China both in terms of pricing and software, Kaihara said.
The company needed to boost the competitiveness of its business through a fundamental restructuring of its strategy, as it faces intensifying global competition, including from the rise of new car manufacturers, he added.
By contrast, Honda said its motorcycle business continued to perform strongly, with global sales led by India and Brazil, helping offset weakness in its automobile operations.
The company maintained its operating profit forecast for the year ending March 2026 at 550 billion yen.
CFO Eiji Fujimura said the full‑year outlook still faced potential downside risks from remaining losses tied to Honda’s U.S. EV business.
However, he added that those risks were offset in the forecast by favourable exchange-rate conditions and vehicle sales that remain above what the company had projected earlier this year.
($1 = 155.4100 yen)
($1 = 0.8390 euros)
Reporting by Daniel Leussink; Editing by Christopher Cushing, David Dolan and Anil D’Silva
