Honda Profit Drops 25 Percent Due To Electric Vehicle Costs And Weakening Sales

Photo: Honda experienced a decline in profit. (Photo: Carscoops)

JAKARTA Honda Motor Co., Ltd. recorded a 25 percent decrease in operating profit in the second quarter (July 'September) of fiscal year 2025/2026. The operating profit of the Japanese automaker was recorded at 194 billion yen, down from 257.9 billion yen in the same period the previous year.

Executive Director of Vice President Honda Noriya Kaihara, said the decline was mainly due to the one-time burden related to electric vehicles (EVs), decline in sales in Asia including China, as well as disruptions in semiconductor supply from major suppliers.

Honda also cut its annual operating profit projection until March 2026 to 550 billion yen, down about 21 percent from its previous estimate of 700 billion yen. As reported by Reuters, Saturday, November 8.

In addition, Honda estimates that global electric vehicle sales by 2030 will only reach about 20 percent of total sales, lower than the initial target of 30 percent. In Asia, including China, sales targets were revised from 1.09 million units to 925.000 units.

Kaihara admits that the increasingly fierce competition from Chinese automotive manufacturers in Southeast Asia has forced automakers to provide more incentives or lower vehicle selling prices.

"We recognize that a fundamental review is needed for Asia," he said while stressing that there was no significant launch of a new model in the near future.

With challenges ranging from the cost burden of electric vehicles, intense competition in the Asian market, to the shortage of semiconductor chips, Honda is now trying to reorganize its global strategy. The company's main focus going forward is maintaining cost efficiency, strengthening supply chains, and reviewing electric vehicle strategies to remain competitive amid rising market pressure.