Honda Reports First Annual Loss as EV Writedown Hits Earnings
Honda reported its first-ever annual loss as a publicly listed company on Thursday, after the Japanese automaker recorded massive impairment charges tied to its electric vehicle business and faced pressure from U.S. trade tariffs.
Despite the historic loss, Honda shares surged more than 4% after the company issued a more optimistic outlook for the current fiscal year. The stock rose 4.4% to 1,327.5 yen during trading in Tokyo.
Massive EV Impairment Drives Losses
Honda posted an operating loss of 414.35 billion yen ($2.62 billion) for the fiscal year ended March 31, compared with an operating profit of 1.213 trillion yen in the previous year.
The automaker also recorded a net annual loss of 433.94 billion yen, reversing from a net profit of 835.84 billion yen a year earlier.
According to Honda, the losses were mainly caused by impairment charges of up to $15.7 billion linked to its electric vehicle operations. Earlier this year, the company warned that it could face expenses and losses of as much as 2.5 trillion yen following a major reassessment of its EV strategy.
Honda Shifts Focus Toward Hybrid Vehicles
Honda said it plans to strengthen its North American business by increasing sales of conventional gasoline-powered vehicles and hybrid electric vehicles.
The company expects hybrids to remain a major growth driver, as many cost-conscious consumers continue to prefer cheaper and more flexible hybrid models over fully electric vehicles.
Honda also noted that demand for EVs in North America weakened, leading the company to cancel the launch and development of certain electric models.
U.S. Tariffs and China Competition Add Pressure
The automaker faced additional challenges from U.S. import tariffs, which contributed to higher vehicle prices and weaker automobile demand.
However, Honda could receive some relief after the U.S. Supreme Court ruled that a large portion of President Donald Trump’s trade tariffs were illegal.
In China, Honda also reduced the value of its investments due to intense competition in the market and slowing vehicle demand.
Vehicle Sales Mixed Across Segments
Honda’s total sales increased 0.5% year-over-year to 21.797 trillion yen.
The company sold 3.4 million automobiles during the fiscal year, marking an 8.9% decline compared with the previous year. In contrast, Honda’s two-wheeler business performed strongly, with motorcycle sales rising 7.4% to 22.1 million units.
Honda expects to return to profitability in the fiscal year ending March 2027 and forecast an operating profit of 500 billion yen.
