Honda’s Q3 2025 profit fell more than 60% as US tariffs and costly EV restructuring weigh on results. Read the full analysis and see what’s next for the automaker.
Honda Motor Co. reported a dramatic plunge in its third‑quarter earnings for the fiscal year ending March 2026. Operating profit for the October‑December 2025 period fell to 153.4 billion yen (about US$987 million), a 61.4% drop from the same quarter a year earlier and well under the consensus forecast of 174.5 billion yen.
Why the profit slide?
The decline stems from two major headwinds:
- U.S. tariff impact: Additional duties imposed by the United States shaved roughly 280 billion yen off Honda’s quarterly earnings.
- Electric‑vehicle (EV) restructuring costs: One‑off write‑downs, asset impairments and other expenses related to Honda’s EV program cost the company about 270 billion yen.
Combined, these factors erased nearly half a trillion yen of profit that the automaker had expected to generate.
EV market turbulence
The global demand for electric vehicles is cooling, especially in North America where consumers are gravitating toward lower‑priced models or hybrid alternatives – a segment long dominated by Toyota. Honda, which has never been a front‑runner in EV technology, now finds its nine‑month EV division (April‑December 2025) operating at a loss.
Company executives, including Executive Vice‑President Noriya Kaihara, warned that the firm must build a “leaner operating structure able to respond quickly to changing business conditions.”
U.S. remains a key market
Despite the setbacks, the United States continues to be Honda’s biggest market, contributing more than 40% of its global sales. However, the “very negative” outlook for the North‑American EV segment – driven by fading subsidies and waning consumer interest – has heavily dented the company’s profitability.
Motorcycle business provides a cushion
While the car side struggles, Honda’s motorcycle division is performing strongly, led by robust sales in India and Brazil. This segment helped soften the overall earnings hit.
Outlook for FY 2026
Honda has maintained its full‑year operating profit target at 550 billion yen. Finance Chief Eiji Fujimura noted that lingering EV‑related losses, especially in the U.S., pose a risk to that goal. Nevertheless, the forecast assumes favorable exchange‑rate effects and higher‑than‑expected vehicle volumes to offset the downside.
Analysts will be watching how quickly Honda can streamline its EV strategy and whether the broader market slowdown will ease before the next reporting period.