Honda’s Q1 Profit Halves Amidst US Tariffs, But Outlook Improves
Dramatic Profit Decline
TOKYO (AP) — Japanese automotive giant Honda Motor Co. announced a dramatic halving of its quarterly profit, reporting 196.7 billion yen ($1.3 billion) for the April-June period. This stark figure stands in sharp contrast to the 394.7 billion yen recorded in the same quarter a year prior, primarily attributed to the significant burden of 25% tariffs imposed on vehicle exports to the United States.
The Tokyo-based manufacturer of popular models like the Accord sedan, alongside its famed robotics division that produced the Asimo robot, saw its quarterly sales dip by a modest 1.2% to 5.3 trillion yen ($36 billion).
Revised Forecast and Persistent Challenges
Despite the challenging environment, Honda has revised its profit forecast upwards for the current fiscal year, which concludes in March 2026. The company now anticipates a profit of 420 billion yen ($2.9 billion), a considerable improvement from its earlier, more conservative estimate of 250 billion yen. However, even with this upward revision, the projected profit still represents a substantial 50% decline from the previous fiscal year’s financial performance. Honda maintains its global vehicle sales forecast of 3.62 million units for this fiscal year.
The punitive 25% tariffs on vehicle exports to the U.S. have exacted a heavy toll on Honda’s profitability. The company conducted a “detailed review” and estimated the negative financial impact of these tariffs at approximately 450 billion yen ($3 billion) for the period.
Mixed Performance Across Markets
While facing these headwinds, certain segments of Honda’s global operations demonstrated resilience. The company reported robust sales in its motorcycle business, particularly in growth markets like Brazil and Vietnam. Similarly, North American car sales remained strong, cushioning some of the blow from the tariffs. Conversely, auto sales experienced declines in its home market of Japan, as well as across the rest of Asia and Europe. Globally, Honda’s quarterly auto sales totaled 839,000 units, a decrease from 869,000 units sold in the comparable period last year.
EV Initiatives and Future Outlook
Adding to the financial pressures, Honda incurred a one-time expense related to its electric vehicle (EV) initiatives. This included losses linked to EVs sold in the U.S. market and write-offs associated with changes to its EV lineup.
Looking ahead, Honda’s Chief Financial Officer and Director, Eiji Fujimura, expressed cautious optimism regarding recent trade developments. He welcomed the agreement between the U.S. and Japan to reduce the initially planned 25% tariff on imported automobiles to 15%. While still higher than pre-tariff levels, Fujimura stated this reduction would serve as “a positive” for the company’s business, its customers, suppliers, and shareholders.
Fujimura reiterated Honda’s longstanding commitment to promoting free trade and fair competition worldwide, aiming to deliver quality products and “contribute to the local community.” Acknowledging the shifting landscape of international commerce, he concluded that the company must “face up to this new normal.”
