Honda Motor Co. has forecast a significant 70% decline in net profit for the financial year 2025–26, citing the adverse effects of U.S. trade tariffs on the global automotive industry. The Japanese automaker expects net profit to fall to 250 billion yen by March 2026, attributing the drop primarily to the economic impact of tariff policies and recovery efforts.
This projection follows Toyota’s recent announcement forecasting a 35% year-on-year decrease in annual net profit due to similar pressures. Honda estimates that the tariffs and related recovery measures will cut around 450 billion yen from its operating profit over the year.
The negative outlook arises after U.S. President Donald Trump imposed a 25% tariff on imported vehicles last month, a move aimed at revitalising the U.S. automotive sector but posing significant challenges to Japanese manufacturers. Speaking to reporters, Honda CEO Toshihiro Mibe acknowledged the difficulty of making long-term forecasts amid fluctuating trade policies, stating, “The impact of tariff policies in various countries on our business has been very significant.”
Honda reported a net profit of 835 billion yen for the previous financial year, marking a nearly 25% drop from the previous period and falling short of its February forecast of 950 billion yen. The decline was attributed to lower sales volumes, especially in China and the ASEAN region, as well as increased incentives for electric vehicle (EV) sales in North America. Despite these challenges, hybrid vehicle sales showed growth.
There is a potential silver lining for Honda as recent developments may lessen the financial strain from tariffs. Last month, President Trump issued an executive order to mitigate the cumulative effects of overlapping tariffs, offering a two-year grace period for automakers to restructure their supply chains within the United States. This decision is expected to benefit Honda, which currently manufactures over 60% of its U.S. vehicle sales domestically, the highest proportion among major Japanese automakers.
Tatsuo Yoshida, an auto analyst at Bloomberg Intelligence, noted that Honda’s extensive U.S.-based production may cushion the blow compared to its peers, making the impact of tariffs “comparatively smaller” for the company.
-Japan Today
