Japanese auto giant Honda Motors reported a 76 % year-on-year plunge in fourth-quarter operating profit, falling to 73.5 billion yen, as the company braced for the potential impact of US President Donald Trump’s proposed auto tariffs.
For the financial year ending March, Honda’s revenue rose 6.2 % year on year to 21.69 trillion yen, slightly above LSEG’s forecast of 21.63 trillion yen, according to Reuters.
However, full-year operating profit declined 12.2 % to 1.21 trillion yen. The results come amid rising trade tensions with the US, which has imposed a 25 % tariff on foreign automobile imports.
Looking ahead, Honda has forecast a 59 % decline in profit for the current financial year and announced it will pause its plans to build an EV supply chain in Canada. Japan’s second-largest automaker expects operating income to drop to 500 billion yen (approximately 3.38 billion US dollars) for the year ending 31 March 2026, compared to 1.21 trillion yen in the previous year.
Honda said the profit forecast reflects several key changes. Positive factors include a 156.1 billion yen boost from sales growth, a 250.0 billion yen gain from pricing and cost impacts, and a 127.6 billion yen benefit from revisions to the estimation model for automobile product warranties.
However, these gains are offset by increased expenses of 219.1 billion yen, higher R&D spending of 126.0 billion yen, adverse currency effects totalling 452.0 billion yen, and a combined 450.0 billion yen impact from tariffs and related recovery efforts. As a result, Honda expects operating profit to fall by 713.4 billion yen compared to the year ending 31 March 2025.
Honda’s consolidated sales revenue for the year ending 31 March 2025 increased by 6.2 % to 21.69 trillion yen, driven primarily by higher sales in its motorcycle business and favourable currency exchange effects.
The company also confirmed it will delay by approximately two years its previously announced plan (on 25 April 2024) to develop a comprehensive EV value chain in Canada, due to a slowdown in global EV demand. Honda said it will announce a new timeline for the project once finalised, while closely monitoring market trends.
In March, Honda decided to manufacture its next-generation Civic hybrid in Indiana rather than Mexico to avoid potential US tariffs on one of its best-selling models, according to Reuters.
According to US car marketplace CarPro, Asian automakers represented six of the top eight brands by sales volume in the US in 2024, with Honda ranking fourth.
Earlier in February, Honda and rival Nissan ended merger talks over a proposed 60 billion US dollar deal that would have created the world’s third-largest automaker by sales volume.
