TOKYO (Reuters) – Honda on Friday cut its profit forecast for the current fiscal year by 21%, hit by extraordinary costs for electric vehicles, falling sales in China and other Asian markets, as well as a shortage of parts equipped with Nexperia chips.
Japan’s second-largest automaker cut its operating profit forecast for the fiscal year ending March 2026 to 550 billion yen ($3.65 billion), from the 700 billion yen previously forecast.
In the first half of the current fiscal year, Honda’s automobile division posted an operating loss, largely due to extraordinary expenses of 224 billion yen related to electric vehicles. The company now forecasts that its share of global electric vehicle sales will be 20% in 2030, down from its previous target of 30%.
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The company now expects to sell 925,000 vehicles in Asia — including China — in the current fiscal year, a drop of more than 10% from the previous target of 1.09 million cars.
The entry of Chinese automakers has intensified competition in Southeast Asia, which has led companies in the region to offer consumers greater incentives or lower prices, Executive Vice President Noriya Kaihara said on Friday.
“We recognize that a fundamental review is needed for Asia,” Kaihara said. “However, from this fiscal year onwards, there will be no particularly new models.”
IMPACT OF CHIPS SHORTAGE AND TARIFFS
Honda’s lower annual profit forecast included a 150 billion yen loss related to chip shortages from Dutch company Nexperia.
Kaihara said the company is looking to resume normal production the week of Nov. 21, after suspending manufacturing at a facility in Mexico last week and adjusting operations in the U.S. and Canada.
The disruption resulted from the company’s reliance on a single supplier for some parts, Kaihara said.
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Honda also predicted a loss of 385 billion yen due to US tariffs, which is 65 billion yen less than the previous estimate.
Kaihara said the tariffs would likely remain in place, but noted that Honda benefits from a high rate of local production in North America, where demand for hybrid vehicles is strong.
The automaker reported a 25% drop in operating profit between July and September, to 194 billion yen, compared to 257.9 billion yen in the same period a year earlier.
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Its motorcycle business suffered from weaker volumes in Vietnam, but strong demand in Brazil and Thailand helped offset this decline, allowing the company to maintain high profitability.
