Honda's Profits Plummet Amid Tariff Struggles and EV Strategy Shifts
Honda's financial landscape shifted dramatically, revealing a staggering 42% profit decline for the nine months ending in December. This downturn, attributed to U.S. tariffs imposed during the Trump administration, has left the Japanese automaker grappling with its earnings.
In figures released Tuesday, Honda Motor Co. reported a profit of 465.4 billion yen (approximately $3 billion), a sharp decrease from 805.2 billion yen the previous year. This marks the second consecutive year of profit decline for the manufacturer known for its Accord sedan, Civic compact, and Odyssey minivan.
Sales during this period also fell by 2.2%, totaling 15.98 trillion yen ($102.6 billion). Despite these challenges, Honda maintained its full fiscal year profit forecast at 300 billion yen ($1.9 billion), indicating a cautious optimism amidst the turmoil.
The slowdown in electric vehicle sales in the U.S. market contributed to this negative trend, although Honda's motorcycle division performed relatively well, providing some balance to the overall results. In a strategic pivot, Honda revised its global EV sales ratio target for 2030 down to 20%, a significant reduction from the earlier goal of 30%. The company also announced the cancellation of certain EV models due to the rapidly evolving market landscape.
Under the Trump administration, policies favoring the oil and gas sector have reversed previous initiatives that supported electric vehicle growth, dismantling programs that had been established during the Biden administration aimed at promoting environmentally friendly vehicles.
Last year, Trump reduced tariffs on automobiles and auto parts from an initial 25% to 15%. In response to these economic pressures, Japan committed to investing $550 billion in U.S. projects, highlighting the ongoing impact of tariffs on Japan's export-driven economy.
In a related development, Toyota Motor Corp., Japan's largest automaker, also reported a profit decline last week and announced a leadership change with Kenta Kon stepping up as the new chief executive and president.
Prime Minister Sanae Takaichi, who made history as Japan's first female leader, recently celebrated a decisive parliamentary election victory for her governing party. This success is anticipated to facilitate her Liberal Democratic Party's agenda, which includes enhancing growth through increased government spending in technology and defense sectors.
In the stock market, Honda shares rose by 2.1% during Tuesday's trading session. The Nikkei 225 index also saw a boost, closing 2.3% higher and reaching record highs for two consecutive days, partly fueled by Takaichi's rising popularity.
