TOKYO (AP) – Honda's profit for the fiscal year ending March 2023 declined by 24.5% compared to the previous year, primarily due to a drop in vehicle sales in China. The Japanese automaker issued a warning on Tuesday that President Donald Trump's tariffs are expected to further negatively impact its earnings moving forward.
Honda Motor Co., based in Tokyo, reported an annual profit of 835.8 billion yen ($5.6 billion), down from 1.1 trillion yen in the previous fiscal year. Despite this profit decline, the company saw annual sales rise by 6.2%, reaching nearly 21.69 trillion yen ($147 billion). However, the company faced challenges from rising research and development costs, even as it achieved record global motorcycle sales exceeding 21 million units during the fiscal year. Hybrid vehicle sales performed well, particularly in the U.S., which contributed to improving profitability per vehicle, according to the manufacturer of the Accord sedan and CR-V sports utility vehicle.
Noriya Kaihara, Honda's Executive Vice President, acknowledged the adverse effects anticipated from Trump’s tariffs, predicting a loss of 650 billion yen ($4.4 billion) in operating profit for the fiscal year ending March 2026. The negative impact mainly stems from U.S. tariffs on vehicles imported from Canada and Mexico, whereas Honda’s vehicle shipments from Japan to the U.S. are minimal.
Honda officials emphasized that significant uncertainties remain in the market, but they underscored the importance of providing a realistic forecast, even if it is perceived as pessimistic. Chief Executive Toshihiro Mibe stated that Honda will strive to mitigate the impact of tariffs, indicating that the company plans to move a portion of its auto production to U.S. plants while re-evaluating its investment strategies. Mibe assured reporters that all forthcoming decisions would be made "very carefully."
Additionally, Mibe confirmed that Honda is committed to increasing its production of electric vehicles. Many automakers, including Honda, have expressed confusion over Trump's stance on electric vehicles and tariffs, leading some companies to scale back their ambitious electrification plans.
Looking ahead, Honda projects a dramatic decline of 70% in profit for the fiscal year ending March 2026, estimating profits at 250 billion yen ($1.7 billion) on projected sales of 20.3 trillion yen ($137 billion), a 6% decrease from the previous year.
In a separate development, Honda and Nissan had announced in December the initiation of discussions aimed at forming a joint holding company, with Mitsubishi Motors Corp. considering joining the collaboration. However, these plans quickly fell apart, as Nissan expressed concerns about potential disadvantages in such an arrangement. Nissan, which has recently struggled financially, is set to report its financial results later on Tuesday.
Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama
