Honda Reports First Annual Loss as China Sales Decline for Fifth Consecutive Year

Honda Motor faces its first annual loss since going public.

On March 12, Honda Motor Co., Ltd. announced that it expects an operating loss of 270 billion to 570 billion yen for fiscal year 2025 (April 2025–March 2026) and a net loss of 420 billion to 690 billion yen.

Previously, Honda had already experienced a sharp decline in its operating performance; as of the third fiscal quarter of FY2025, Honda’s operating profit had declined year-on-year for four consecutive quarters. At that time, however, Honda still maintained its FY2025 operating profit target of ¥550 billion, a figure vastly inconsistent with the current projected loss.

On the same day, Honda also announced that it has canceled part of its plans to develop, manufacture, and sell electric vehicles in the U.S. market. Previously, Honda had pursued an aggressive electrification strategy, setting a target to fully transition to new-energy vehicles by 2040. However, facing shifting market demand and mounting pressures from corporate transformation, Honda has been forced to significantly adjust its electrification strategy. This move is expected to incur losses of up to 2.5 trillion yen for the company.

In addition to the difficulties in electrification transition, Honda is also facing challenges in the Chinese market. In 2025, Honda sold 3.522 million vehicles globally, a 7.5% decline compared to the previous year. However, in the Chinese market, the annual sales were only 645,000 units, a 24% decline, marking the fifth consecutive year of decline in China.