Honda Motor Co., Ltd. reported a 25% drop in operating profit for its July‑September 2025 quarter, with earnings falling to 194 billion yen from 257.9 billion yen a year earlier. Net profit for the six months ended September also slipped 37% to 311.83 billion yen, reflecting the combined impact of tariff costs and supply‑chain disruptions.
The decline is largely driven by a 25% U.S. import tariff that has been in effect since April 2025, which weighed 164.3 billion yen on the company’s first‑half operating profit. A separate headwind is the shortage of chips from Dutch supplier Nexperia, whose export halt from China has forced Honda to suspend or adjust production at North American and Mexican plants. The automotive segment recorded a 73 billion yen loss, amplified by one‑off electric‑vehicle costs and the broader semiconductor crunch.
In contrast, Honda’s motorcycle division delivered a record performance, selling 10.76 million units in the quarter and generating 189 billion yen of operating profit—an increase of 11.3 billion yen year‑on‑year. This strong segment helped offset some of the losses in the automobile business and provided a buffer for the company’s overall profitability.
Management cut its full‑year operating‑profit forecast by 21%, lowering the target to 550 billion yen from the previously expected 700 billion yen. Net‑profit guidance was also reduced to 300 billion yen from 420 billion yen, a move that reflects the ongoing chip shortage, weaker demand in Asia, and the sustained impact of U.S. tariffs.
Executive Vice President Noriya Kaihara said Honda is “currently managing an industry‑wide semiconductor supply‑chain issue, making strategic adjustments to production as necessary.” He added that the company is recalibrating its electric‑vehicle strategy, lowering the 2030 global EV sales ratio target to 20% from 30% to align with slower demand in North America and Europe. These comments signal a shift toward hybrids and internal‑combustion vehicles while the company tightens cost controls.
Investor sentiment has been mixed. Some market participants highlighted the motorcycle segment’s resilience and the company’s proactive production adjustments, while others expressed concern over the profit miss, the downward guidance, and the persistent tariff and chip‑shortage headwinds. The overall reaction underscores the tension between Honda’s short‑term operational challenges and its longer‑term strategic realignment.
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