Honda quarterly operating profit plunges as tariffs and EV slowdown bite

Yesterday 10:50

By: Dakir Madiha

Honda quarterly operating profit plunges as tariffs and EV slowdown bite

Honda Motor reported a sharp fall in profits as U.S. import tariffs, weakening demand for electric vehicles, and ongoing semiconductor supply disruptions continued to weigh on performance. The Japanese automaker said net profit for the nine months through December fell 42 percent from a year earlier to 465.44 billion yen, while revenue over the same period declined 2.2 percent to 15.98 trillion yen.

The pressure intensified in the third quarter, when operating profit dropped 61.4 percent year on year to 153.4 billion yen, marking a fourth consecutive quarterly decline. The result came in below market expectations and underscored the impact of higher trade costs and softer conditions in the global EV market. Honda pointed to the 25 percent U.S. tariffs on vehicle imports as a major drag on earnings, alongside reduced pricing power in electric models.

Production was also disrupted at North American plants due to the global chip shortage, linked in part to supply issues at Dutch semiconductor maker Nexperia. The supplier has been caught in a dispute involving the governments of the Netherlands and China, adding uncertainty to component availability and manufacturing schedules. North America now accounts for about 42 percent of Honda’s global sales, leaving margins especially exposed to these challenges.

Despite the weak quarterly showing, Honda kept its full-year forecast unchanged. The company continues to expect operating profit of 550 billion yen for the fiscal year ending March 31, 2026, a steep decline from the previous year. Management said the outlook reflects persistent headwinds across key markets rather than a short-term setback.

Competitive pressure remains intense in Asia, particularly in China and Southeast Asia, where local electric vehicle makers have expanded rapidly. Honda has scaled back its global target for EVs to account for 20 percent of total sales by 2030, down from an earlier goal of 30 percent. Analysts have also noted that the absence of new model launches planned for the Asian region until the next fiscal year could allow Chinese rivals to gain further market share.

In the United States, Honda expects total vehicle sales of about 1.5 million units in 2026, representing a modest 4 percent increase from the previous year. The company said tariffs and chip-related production limits are likely to continue affecting profitability even as overall sales volumes stabilize.