Honda Earnings Take a Hit as EV Demand Cools in Key Markets

Honda has reported a sharp decline in profits for the first nine months of the current financial year, highlighting the growing pressure on Japanese automakers from global trade tensions and a slowing electric vehicle market.

The Tokyo-based company said its earnings were hit by U.S. tariffs introduced under President Donald Trump’s administration, reported AP.For the nine months ending December, Honda Motor Co. posted a profit of 465.4 billion yen, down 42% from 805.2 billion yen recorded during the same period a year earlier. This marks the second consecutive year in which Honda’s profit has fallen for the April–December period.Revenue performance was also weaker. Sales slipped 2.2% year-on-year to 15.98 trillion yen, compared to the previous year’s figure.

Despite the softer numbers, Honda maintained its full-year profit forecast of 300 billion yen, indicating confidence in a gradual recovery in the final quarter.Honda pointed to multiple factors behind the decline. A slowdown in demand for electric vehicles in the U.S. market weighed on performance, while the company said its motorcycle business continued to deliver relatively strong results and helped offset some of the pressure.

Reflecting the changing EV landscape, Honda revised its long-term electrification targets. The company has cut its global EV sales ratio projection for 2030 to 20%, down from its earlier goal of 30%. It also confirmed that development of certain EV models has been scrapped, citing rapid shifts in market conditions.Trade policy in the U.S. remains a major concern for Japanese exporters. The Trump administration, which has taken a more supportive stance toward oil and gas industries, has rolled back several EV-friendly measures introduced during the Biden era.

Although tariffs on automobiles and auto parts were reduced to 15% from the initially announced 25% last year, they continue to weigh heavily on export-driven companies.

As part of broader trade discussions, Japan has committed to investing $550 billion in U.S. projects.Honda is not alone in facing these challenges. Last week, Toyota Motor Corp. also reported a drop in recent profits and announced a leadership change, with Kenta Kon set to take over as chief executive and president. Inputs from AP.