Honda Reports First Full-Year Operating Loss in Nearly 70 Years

Honda Motors released its financial report on Thursday, marking the first time in its nearly 70-year history as a public company that it has recorded an annual operating loss. The massive restructuring costs of electric vehicle (EV) business combined with the impact of U.S. tariffs are the main reasons.

For the fiscal year ending in March this year, Honda's operating loss amounted to ¥414.3 billion (approximately $2.6 billion), a sharp drop compared to the operating profit of ¥1.2 trillion in the previous fiscal year. This result also fell below market expectations, which had forecasted a median loss of ¥315.6 billion.

The EV business is at the core of the losses this time around. During the fiscal year, Honda accumulated confirmed EV-related losses of up to ¥1.45 trillion, and an additional ¥500 billion in related costs is expected in the new fiscal year.

Motorcycle Business Serves as a Key Buffer

Amid the troubles in the automotive business, the strong performance of the motorcycle segment provided support for the group. High demand in India and Brazil drove the business to achieve historic records in both sales and operating profits in the just-concluded fiscal year.

Looking ahead to the new fiscal year, Honda plans to further expand motorcycle production capacity in India, with a target sales volume of 22.8 million units, aiming for a historical high. The motorcycle business will continue to serve as the main source of profit for the group during the period of pressure on the automotive side.

Existing Pressures in the New Fiscal Year; Honda Still Anticipates Turning a Profit

Despite the significant losses, Honda maintains its judgment to return to profitability in this fiscal year, expecting to achieve an operating profit of ¥500 billion, mainly relying on the advancement of cost-reduction measures and the continued contribution of the motorcycle business.

In terms of external risks, Honda forecasts that the rise in raw material prices affected by the situation in the Middle East will erode operating profits by about ¥313 billion in the current fiscal year. The continuous decline in passenger car sales in the Chinese market is also narrowing the group's overall profit margins.

Whether Honda can achieve a leap from a historic loss to a profit of 100 billion in one year will be the key test for the success of its new strategy.