Honda’s Profits Slide Amid Trade Tariffs and Electric Vehicle Challenges

TOKYO – Honda Motor Co. has announced a significant downturn in its financial performance, with profits plunging by 42% for the nine months ending in December compared to the same period last year. This steep decline is largely attributed to the impact of tariffs imposed by U.S. President Donald Trump, which have negatively affected the Japanese automaker’s earnings.

During this period, the Tokyo-based company, known for its popular models like the Accord sedan, Civic compact, and Odyssey minivan, reported a profit of 465.4 billion yen (approximately $3 billion). This figure marks a sharp decrease from the 805.2 billion yen reported in the previous year. Notably, this is the second consecutive year Honda has experienced a profit decline over these nine months.

Sales for Honda also took a hit, dipping by 2.2% to 15.98 trillion yen ($102.6 billion) from the year before. Despite these challenges, Honda has maintained its full fiscal year profit forecast at 300 billion yen ($1.9 billion).

One of the contributing factors to this financial slump is the slowdown in the U.S. electric vehicle market, as pointed out by Honda. On the brighter side, the company’s motorcycle division has shown relatively robust performance, providing some relief amidst the challenges.

The slowdown in electric vehicles in the U.S. market was one negative factor, according to Honda, while the relatively healthy performance in its motorcycle division worked as a plus.

Honda lowered its global EV sales ratio projection for 2030 to 20% from its previous target of 30%. It also said it canceled the development of some EV models, because the EV market was changing.

The Trump administration, which has favored the oil and gas industry, has backpedaled on prior programs supporting the proliferation of EVs, dismantling programs that kicked in during the Biden administration, which had encouraged environmentally cleaner cars and trucks.

Last year, Trump lowered the tariffs on automobiles and auto parts to 15% from an earlier 25% that he had initially announced. Japan promised to invest $550 billion in U.S. projects.

Tariffs are a major blow to Japan’s export-reliant economy, including the automakers. Last week, Japan’s top automaker Toyota Motor Corp. reported a decline in recent profit, and announced that its chief financial officer, Kenta Kon, will become its new chief executive and president.

Prime Minister Sanae Takaichi, who took office in October as Japan’s first female leader, scored a landslide parliamentary election victory for the governing party over the weekend. That’s expected to make it easier for her Liberal Democratic Party to push forward on its policies, including bolstering growth by boosting government spending, especially in technology and defense.

Honda stock jumped 2.1% in Tuesday’s trading. The Nikkei 225 benchmark finished 2.3% higher, renewing a record high for the second day straight, in a rally set off, in part, by Takaichi’s popularity.

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Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama