Honda net profit down 42% from EV losses and Trump tariffs
Honda net profit fell 42% in the most recent reporting period, driven by EV losses and higher costs tied to U.S. โTrump tariffs.โ The combination compressed margins and limited earnings flexibility across key markets.
Tariffs on U.S.-bound vehicles and components reduced operating profit by about ยฅ125 billion in the quarter, as reported by Investing.com. This underlines how trade-related costs are now a persistent headwind to the companyโs operating line.
Why it matters: operating hit from tariffs and EV costs
The annualized tariff drag has been framed at up to ยฅ650 billion for the fiscal year ending March 2026, as reported by Fortune. Taken together with soft EV demand, that scale of impact explains the step-down in net profit and more conservative planning assumptions.
Management has paired tariff countermeasures with a more cautious EV stance amid cost overruns and slower uptake. โThe growth of the electric vehicle market has slowed more than initially expected, making it difficult to anticipate further progress,โ said Toshihiro Mibe, President and CEO, as reported by Yahoo Autos. In North America, the company recorded about ยฅ113.4 billion in quarterly EV-related losses, and its near-term emphasis has shifted toward hybrids and profitability discipline.
Immediate impact: profit guidance, mitigation steps, and timeline shifts
Guidance reflects these pressures. Analysts tracked by Investopedia noted that net profit is forecast to drop roughly 70% year over year, with operating profit down about 59%, largely tied to tariff effects and weaker EV demand.
Mitigation will likely focus on expanding U.S. production capacity, deepening local sourcing, and selective pricing adjustments as policy clarity improves. S&P Global Ratings flagged a negative credit outlook while affirming an A-/A-2 rating, citing tariff exposure and intensifying EV competition.
Tariff impact: ยฅ125b quarterly; ยฅ450bโยฅ650b annual drag
Honda has indicated an approximately ยฅ125 billion quarterly reduction in operating profit attributable to U.S. tariffs. According to Executive Vice President Noriya Kaihara, the expected full-year impact has been revised to about ยฅ450 billion from a prior estimate near ยฅ650 billion, outlining a wide range that depends on duration and scope of the measures.
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