Honda Cuts 2025 Profit Forecast by 21%

Recently, according to media reports, Honda has announced a significant reduction of 21% in its full-year profit forecast due to multiple factors, including rising one-time costs for electric vehicles, declining sales in China and other Asian markets, and a shortage of semiconductor components from Nexperia.

Honda Motor Co. has reportedly lowered its operating profit forecast for the fiscal year ending March 2026 from 700 billion yen to 550 billion yen (approximately 25.56 billion USD). In the first half of this fiscal year, its automotive business has already incurred an operating loss, with one-time expenses related to electric vehicles reaching 224 billion yen. As a result, Honda has reduced its target for global electric vehicle sales to account for 20% by 2030, down from the previous target of 30%, and has suspended the development of certain electric vehicle models.

Honda Motor's operating profit for the July to September quarter fell by 25% year-on-year to 194 billion yen. Revenue for the first half of the fiscal year (April to September) was 10.6 trillion yen, a slight decrease of 1.5% year-on-year. Operating profit was 438.1 billion yen, a significant decline of 41% year-on-year.

Honda Motor is currently facing numerous challenges. Firstly, the performance in the Asian market is not promising. Honda Motor announced that it would lower its annual sales forecast for the Asian market (including China) from 1.09 million units to 925,000 units, a decline of over 15%. In addition, the chip shortage issue has dealt a heavy blow to Honda Motor, which is expected to result in a loss of approximately 150 billion yen. The impact of U.S. tariff policies is also significant, with Honda Motor expected to incur a loss of 385 billion yen (approximately 17.891 billion yuan). However, the high proportion of local production in North America and strong demand for hybrid vehicles in the region have partially mitigated the impact of the tariffs.

However, affected by the chip shortage and weak demand in the Asian market, Honda has revised its global automobile sales forecast for this fiscal year from 3.62 million units to 3.34 million units. It is worth mentioning that despite the challenges faced by Honda, there are bright spots, such as the strong performance of Honda's motorcycle business. Although sales in the Vietnamese market were sluggish, strong demand in Brazil and Thailand made up for some of the decline, allowing this business to maintain robust profitability, achieving historical highs in both sales and operating profit in the first half of this fiscal year.

Honda Motor is actively adjusting its strategy by slowing down the electrification pace in its automobile business and optimizing market layout. At the same time, it relies on the stable performance of its motorcycle business to seek robust development in a complex market environment. GPLP Rhino Finance will continue to monitor its subsequent performance in the market.

Source: Rhino Finance