By Honda Motor Co. is grappling with a sharp profit downturn as global economic forces, including increased U.S. tariffs and fading consumer demand in China, weigh heavily on the automaker’s bottom line.
Honda posted a 24.5% decline in net income for the fiscal year ending March 2025, coming in at ¥835.8 billion (approx. $6.2 billion), down from ¥1.1 trillion the prior year. Operating profit dipped by 12.2% to ¥1.21 trillion, undershooting market forecasts.
The automaker’s revenue, however, saw a modest 6.2% uptick to ¥21.7 trillion, driven by performance in emerging markets and its thriving motorcycle division.
Looking ahead, Honda has issued a cautious forecast, anticipating a staggering 70.1% drop in net profit to ¥250 billion for FY 2026. Company executives point to steep tariffs imposed by the U.S. on key Japanese auto imports and continued challenges in China as key contributors.
Honda is now rethinking its investment approach. A proposed $11 billion EV and battery plant in Canada is being postponed as the firm reassesses long-term viability and cost structures. Honda is also considering moving parts of its supply chain and production out of high-tariff zones.
Meanwhile, the company’s motorcycle segment stood out with record-breaking profitability, offering some cushion amid broader struggles.
Honda remains committed to its long-term electric vehicle transition, but recent global trade volatility has forced it to prioritize flexibility and resilience over rapid expansion.