Honda posts first annual net loss since Tokyo listing amid EV setback
The carmaker says weak North American EV demand forced model suspensions and heavy charges, but it forecasts a return to profit by March 2027.
- Honda reported a net loss of 423.9 billion yen for fiscal 2025, its first annual loss since its 1957 listing on the Tokyo Stock Exchange.
- The loss was primarily caused by weak demand for electric vehicles (EVs) in North America, leading to a major review of the company's EV strategy.
- In response to the setback, Honda is dropping its goal of all-EV/fuel cell sales by 2040 and will reinforce its hybrid vehicle business.
- The company has also indefinitely frozen its plans to construct EV and battery factories in Canada.
Japan’s Honda Motor Co. said on Thursday (May 14) that it booked a consolidated net loss of 423.9 billion yen for fiscal 2025, which ended in March, as weak electric vehicle demand in North America weighed heavily on its business.
The result marked Honda’s first move into the red since its 1957 listing on the Tokyo Stock Exchange. A year earlier, in fiscal 2024, the automaker had posted a net profit of 835.8 billion yen.
Honda said losses connected to the suspension of sales of some vehicle models reached 1,577.8 billion yen in the latest fiscal year. The move followed a review of its EV strategy, which was triggered by sluggish demand.
Despite the heavy loss, Honda expects to return to profitability in the current fiscal year ending in March 2027, projecting a net profit of 260 billion yen. It also anticipates additional EV-related losses of 500 billion yen.
Over the next three years, the company plans to concentrate on rebuilding its automobile operations. It is targeting an operating profit of more than 1.4 trillion yen in the fiscal year ending in March 2029.
“We take the huge loss seriously,” President Toshihiro Mibe told a press conference on Thursday.
“The automobile industry is in a period of structural transformation,” he also said. “It’s my duty to build a business that can tolerate change,” he added, signalling his intention to remain in his post.
Honda also said it will reinforce its hybrid vehicle business, citing rising demand. At the same time, it dropped its goal of making all new car sales either EVs or fuel cell vehicles by 2040.
The company said it will freeze indefinitely its plans to build EV and battery factories in Canada.
Honda is set to roll out a next-generation hybrid system in 2027 and aims to introduce 15 models globally by fiscal 2029. On Thursday, it showed two prototype models fitted with the new system.
The automaker identified North America, Japan and India as key growth markets. In China, where Honda continues to face difficulties, it plans to improve cost competitiveness by using more local components and technologies.
For fiscal 2025, Honda reported an operating loss of 414.3 billion yen, compared with an operating profit of 1,213.4 billion yen the previous year. The company said its balance worsened by 346.9 billion yen because of high tariffs imposed by US President Donald Trump.
Sales rose 0.5 per cent to 21,796.6 billion yen.
Global new vehicle sales dropped 8.9 per cent to 3,387,000 units, with declines in Japan, North America and Europe. The company also saw a sharp fall across Asia, including China.
For the current fiscal year, Honda expects vehicle sales to rise slightly to 3.39 million units.
[Copyright The Jiji Press, Ltd.]
