Honda Forecasts 70% Net Profit Drop Citing 'Tariff Impact'

Published: Tuesday, May 13, 2025 at 7:44 am

Honda Warns of Steep Profit Plunge Due to Tariffs, But May Weather the Storm

Honda Motor Co. is bracing for a significant financial hit, forecasting a staggering 70% drop in net profit for the 2025-26 financial year. This grim outlook, announced Tuesday, is largely attributed to the impact of US trade tariffs on the global auto industry, echoing a similar warning from rival Toyota.

The Japanese automaker anticipates a net profit of 250 billion yen ($1.7 billion) in the coming year, a stark contrast to the 835 billion yen profit logged in the previous financial year. Honda's CEO, Toshihiro Mibe, cited "tariff impact and recovery efforts" as key factors negatively affecting operating profit, estimating a cost of approximately 450 billion yen.

The tariffs, primarily a 25% levy on imported vehicles imposed by the Trump administration, have sent shockwaves through the Japanese auto industry. The move aims to bolster the US auto sector, but it has created significant uncertainty for carmakers. Mibe acknowledged the difficulty in formulating a clear outlook due to the frequent revisions in tariff policies across various countries.

While the situation is challenging, Honda may be in a better position than some competitors. The company builds over 60% of its vehicles sold in the United States within the country, the highest percentage among major Japanese automakers. This domestic production advantage, coupled with a recent softening of the tariffs through an executive order, could mitigate the impact. However, Honda also noted a decline in sales volume in China and the ASEAN region, as well as the impact of increased incentives for EV sales in North America.

BNN's Perspective: While the projected profit drop is concerning, Honda's strong US manufacturing presence offers a degree of resilience. The company's ability to adapt to evolving trade policies and market dynamics will be crucial in navigating these turbulent times. The long-term effects of these tariffs on the global auto industry remain to be seen, but Honda's proactive approach suggests a commitment to weathering the storm.

Keywords: Honda, profit, tariffs, US tariffs, auto industry, Japanese automakers, Toyota, Donald Trump, trade, net profit, financial forecast, car sales, China, ASEAN, EV sales, manufacturing, import tariffs, Toshihiro Mibe, Bloomberg Intelligence, Tatsuo Yoshida

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