Honda Operating Profit Falls Over 60% as Tariffs and Weak EV Demand Bite

Post by : Saif

Honda Motor has reported a sharp fall in its quarterly operating profit, with earnings dropping more than 60% compared to the same period last year. The company said higher U.S. import tariffs and weaker demand for electric vehicles hurt its results. The numbers show that even large and well-known car makers are facing strong pressure as the global auto market changes quickly.

According to the company’s latest report, Honda’s operating profit for the third quarter came in at about 153 billion yen. This is far below the nearly 400 billion yen it earned in the same quarter a year earlier. It also missed what market analysts were expecting. Experts had predicted a higher number based on average estimates, but the final result came in lower, surprising investors and raising fresh concerns about the company’s short-term performance.

Honda is Japan’s second-largest automaker after Toyota. Because of its size and global reach, its results are often seen as a sign of wider trends in the car industry. When Honda’s profit drops this sharply, it suggests that the challenges are not small or temporary. They are part of deeper shifts happening across markets.

One major reason behind the profit fall is U.S. import tariffs. When tariffs rise, the cost of bringing vehicles and parts into the country goes up. Companies must either raise prices or accept smaller profits. Both choices are difficult. Higher prices can push customers away, while lower profits reduce the company’s ability to invest in new technology and expansion.

Another key factor is slower demand for electric vehicles than many companies expected. Over the past few years, automakers invested heavily in EVs, believing buyers would switch quickly from petrol and diesel cars. While EV sales are still growing in many places, the pace has not matched earlier hopes in some markets. Buyers remain worried about charging stations, battery range, and vehicle prices. This slower shift has hurt companies that planned for faster EV growth.

Honda also said its automobile business showed an operating loss for the first nine months of the financial year. This means the core car-making division spent more than it earned during that period. That is a warning sign, because auto manufacturing is the heart of Honda’s global business.

Even with these weak quarterly results, Honda did not change its full-year operating profit forecast. The company kept its target for the financial year ending March 2026 at 550 billion yen. This suggests that management expects conditions to improve or at least stabilize in the coming months. Still, keeping the same forecast can be risky if market conditions remain tough.

The global car industry is now facing a mix of problems at the same time. Trade tensions are raising costs. New technology requires heavy investment. Competition from both traditional rivals and new EV-focused companies is increasing. At the same time, customer demand is becoming harder to predict. Many buyers are delaying big purchases because of economic uncertainty and high interest rates.

For companies like Honda, the path forward requires balance. They must continue investing in electric and hybrid technology while also protecting profits from their traditional vehicle lines. They also need to manage supply chains carefully and respond quickly to policy changes such as tariffs and trade rules.

Honda’s latest results are more than just a company story. They show how global business decisions, government policies, and consumer behavior are all linked. When one part shifts, the effects are felt across the system. The coming quarters will show whether this profit drop is a short dip or part of a longer, more difficult period for major carmakers.

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