Honda's profits fell 24.5% in the fiscal year ended March from a year ago, as its car sales in the Chinese market fell, and the Japanese automaker warned on Tuesday that President Donald Trump's tariffs would exacerbate the worsening of its profitability.
Tokyo-based Honda Motor Corporation abandoned business merger negotiations with Japanese rival Nissan Motor earlier this year, announcing its annual profit of 835.8 billion yen (about $5.6 billion), down from 11 trillion yen in the previous fiscal year.
Annual sales rose slightly, with an increase of 6.2%, close to 21.69 trillion yen, or approximately US$147 billion.
Although Honda's global motorcycle sales hit an all-time high of 21 million units this fiscal year, its R&D costs still put pressure on the company.
Hybrid sales are equally excellent, especially in the U.S. market, and Honda's profitability is also continuing to increase per vehicle, according to manufacturers of Accord sedans and CR-V sport utility vehicles.
Executive Vice President Koji Uchiyama acknowledged that Trump's tariffs are likely to cause damage, which is expected to reduce the company's operating profit by 650 billion yen ($4.4 billion) from the fiscal year ended March 2026. This is mainly due to the tariffs imposed by the United States on cars imported from Canada and Mexico. And Honda's number of cars shipped from Japan to the United States is minimal.
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Officials stressed that many major uncertainties remained, but they believe that even if the predictions may be quite pessimistic, it is still crucial to provide a realistic forecast.
Honda CEO Mibe said Honda will do everything possible to mitigate the impact of tariffs. In the long run, Honda plans to transfer auto production to its U.S. factories and revisit its investment strategy. Mibei revealed to reporters that all decisions will be made "very cautiously".
He also said Honda will continue to stick to its plans to produce more electric vehicles.
Many automakers say they are confused by Trump’s opposition to electric vehicles and the tariffs imposed, and some businesses are shrinking their ambitious electrification plans.
Honda expects its profit to plummet to 70% for the fiscal year ending March 2026, with sales reaching 203 trillion yen ($137 billion), down 6% year-on-year.
Honda and Nissan announced in December that they planned to hold talks to establish a joint venture holding company. Another Japanese automaker, Mitsubishi Motors, also said it is considering joining the group. However, the plans quickly broke down as Nissan said it wanted to withdraw because it would be at a disadvantage.
