Honda Motor Co., Ltd. reported a sharp decline in earnings for the nine months ended December 31, 2025, as slowing electric vehicle (EV) demand, tariff impacts, and strategic model cancellations weighed heavily on profitability.
Profit Drops Amid EV Market Headwinds
The automaker posted sales revenue of ¥15.98 trillion, down 2.2% year-on-year. Operating profit fell 48.1% to ¥591.5 billion, while profit attributable to owners of the parent declined 42.2% to ¥465.4 billion.
Basic earnings per share dropped to ¥115.53, compared with ¥169.69 a year earlier.
Honda cited weaker-than-expected EV sales in North America and Europe, rising sales incentives, and U.S. policy changes—including the removal of EV tax credits and the imposition of import tariffs—as key pressures. Competition in Asia also intensified due to growing local manufacturers.
Major EV-Related Losses
As part of a revised electrification strategy, Honda canceled development of certain EV models and scaled back joint manufacturing initiatives under alliance agreements.
These moves resulted in approximately ¥279 billion in losses and expenses, including:
- ¥103.1 billion in additional provisions tied to alliance-related contracts
- ¥80.7 billion in impairment losses on EV-related assets
- ¥95.5 billion in losses from canceled development of specific EV models
Honda now expects its global EV sales ratio in 2030 to reach 20%, down from its previous 30% target.
Segment Performance Mixed
The Motorcycle Business delivered solid growth, with revenue rising to ¥2.93 trillion and segment profit increasing to ¥546.6 billion.
However, the Automobile Business posted a segment loss of ¥166.5 billion, reflecting EV-related restructuring costs.
The Financial Services Business remained profitable, generating ¥218.0 billion in segment profit.
Financial Position and Cash Flow
Total assets increased to ¥32.85 trillion as of December 31, 2025, driven by higher operating lease equipment and currency translation effects. Total equity rose modestly to ¥12.78 trillion, though the equity ratio declined to 37.9% from 40.1% at the end of March 2025.
Net cash provided by operating activities improved significantly to ¥677.7 billion, compared with ¥153.3 billion a year earlier.
Share Buybacks and Cancellation
Honda continued shareholder returns despite weaker earnings. During the period, the company repurchased ¥670.9 billion worth of treasury stock.
On February 10, 2026, the board resolved to cancel 747 million shares (14.1% of issued shares) on February 27, reducing total shares outstanding to 4.533 billion.
The company maintained its dividend forecast for the fiscal year ending March 31, 2026, projecting a full-year dividend of ¥70 per share.
Full-Year Outlook Revised
Honda revised its full-year forecast downward, projecting:
- Sales revenue: ¥21.1 trillion (–2.7% year-on-year)
- Operating profit: ¥550.0 billion (–54.7%)
- Profit attributable to owners: ¥300.0 billion (–64.1%)
- Earnings per share: ¥75.05
In a statement accompanying the results, President and CEO Toshihiro Mibe emphasized the need to “respond flexibly to rapid changes in the EV market environment” while maintaining long-term competitiveness.
Honda’s American Depositary Shares, listed on the New York Stock Exchange, represent three common shares each.
Despite the near-term earnings setback, Honda signaled it will continue balancing electrification efforts with profitability discipline amid evolving global market conditions.
