Honda Reports Declining Profit
•February 10, 2026
0
Why It Matters
The sharp earnings decline highlights the sensitivity of Japanese automakers to U.S. trade policy and the evolving EV market, signaling potential strategic shifts across the industry.
Key Takeaways
- •Profit fell 42% YoY to 465.4bn yen.
- •Sales slipped 2.2% to 15.98tn yen.
- •EV sales ratio target cut to 20% by 2030.
- •Motorcycle division offset some profit decline.
- •Honda stock rose 2.1% despite earnings drop.
Pulse Analysis
Honda’s earnings shock underscores how quickly tariff policy can reshape profit trajectories for export‑dependent manufacturers. The Trump administration’s reduction of auto‑part duties to 15% eased some cost pressure, yet lingering uncertainty around U.S. EV incentives dampened demand for Honda’s electrified models. This environment forced the Japanese giant to reassess its long‑term EV ambitions, slashing the 2030 sales‑mix target from 30% to 20% and scrapping several upcoming models. The move reflects a broader industry recalibration as automakers balance regulatory risk, battery‑cost volatility, and consumer adoption rates.
While the automotive segment struggled, Honda’s motorcycle business delivered a stabilising boost, cushioning the overall profit dip. Motorcycles remain a high‑margin, low‑capital‑intensity line that benefits from steady demand in Asian markets and a growing niche for urban mobility solutions worldwide. This diversification illustrates why legacy manufacturers maintain a multi‑product portfolio, allowing them to offset cyclical downturns in one segment with strength in another. Analysts are watching whether Honda will double down on two‑wheel innovation, such as electric scooters, to capture emerging market share.
The broader market reaction was mixed: Honda’s shares rose modestly as investors priced in the firm’s commitment to its full‑year outlook and the potential upside from a resilient motorcycle division. Meanwhile, the Nikkei’s rally, buoyed by political stability under Prime Minister Sanae Takaichi, hints at a supportive macro backdrop for Japanese exporters. For industry watchers, Honda’s experience serves as a case study in navigating trade policy shifts, EV market uncertainty, and the strategic value of product diversification in a rapidly evolving automotive landscape.
Honda reports declining profit
Honda Motor Co reported Tuesday a 42% drop in profit for the nine months through December, compared to a year earlier, as U.S. President Donald Trump’s tariffs hurt the Japanese automaker’s earnings.
Honda’s profit over the three quarters totaled 465.4 billion yen ($3 billion), down from 805.2 billion yen.
That marked the second straight year that profit declined during the period at Honda, the maker of the Accord sedan, Civic compact and Odyssey minivan.
Sales for the three quarters dipped 2.2% to 15.98 trillion yen ($102.6 billion) from the previous year. Honda stuck to its full fiscal year profit forecast at 300 billion yen ($1.9 billion).
The slowdown in electric vehicles in the U.S. market was one negative factor, according to Honda, while the relatively healthy performance in its motorcycle division worked as a plus.
Honda lowered its global EV sales ratio projection for 2030 to 20% from its previous target of 30%. It also said it canceled the development of some EV models, because the EV market was changing.
The Trump administration, which has favored the oil and gas industry, has backpedaled on prior programs supporting the proliferation of EVs, dismantling programs that kicked in during the Biden administration, which had encouraged environmentally cleaner cars and trucks.
Last year, Trump lowered the tariffs on automobiles and auto parts to 15% from an earlier 25% that he had initially announced. Japan promised to invest $550 billion in U.S. projects.
Tariffs are a major blow to Japan’s export‑reliant economy, including the automakers. Last week, Japan’s top automaker Toyota Motor Corp. reported a decline in recent profit, and announced that its chief financial officer, Kenta Kon, will become its new chief executive and president.
Prime Minister Sanae Takaichi, who took office in October as Japan's first female leader, scored a landslide parliamentary election victory for the governing party over the weekend. That’s expected to make it easier for her Liberal Democratic Party to push forward on its policies, including bolstering growth by boosting government spending, especially in technology and defense.
Honda stock jumped 2.1% in Tuesday’s trading. The Nikkei 225 benchmark finished 2.3% higher, renewing a record high for the second day straight, in a rally set off, in part, by Takaichi’s popularity.
0
Comments
Want to join the conversation?
Loading comments...