Honda reports its first annual loss since going public

Honda Motor has been hit with its first annual loss since going public due to a double squeeze—global electrification efforts are being hindered while competition in the market remains fierce. On March 12, Honda Motor announced that it expects its fiscal year 2025 (from April 2025 to March 2026) to record its first net loss since going public, with losses reaching up to 690 billion yen (about RMB 24.7 billion). The earnings forecast shows that Honda’s fiscal year 2025 is expected to have an operating loss of 270 billion to 570 billion yen, compared with a prior expectation of a profit of 550 billion yen; it also expects a net loss of 420 billion to 690 billion yen, which is a stark reversal from the prior expectation of a profit of 300 billion yen.

Looking back at Honda’s financial performance over the past three years, its results curve has shown “roller-coaster” fluctuations. Fiscal year 2023 (from April 2023 to March 2024) was a high point for Honda: revenue reached 20.43 trillion yen, operating profit was 1.38 trillion yen, setting a record high, and net profit was 1.11 trillion yen. Fiscal year 2024 (from April 2024 to March 2025) saw performance sharply turn downward.

The financial report shows that although revenue for the fiscal year edged up to 21.69 trillion yen, net profit plunged to 83.58 billion yen, down 24.5% year over year. Among them, the decline in sales in the China market had a particularly clear impact: in 2024, Honda’s sales in China were only 853.7k units, down 31% year over year.

Judging by sales data, Honda’s market in China has been declining for four consecutive years. From 2021 to 2024, its sales were 1.5615 million units, 1.3731 million units, 1.2342 million units, and 853.7k units, with the decline widening year by year.

The direct reason behind the massive losses in this fiscal year is Honda’s reassessment of its electrification strategy. The company announced the same day that it would cancel part of its plans to develop and launch electric vehicles manufactured in the United States, and it expects the total costs and losses resulting from this to reach up to 2.5 trillion yen (about RMB 108.2 billion).

Huainan Yongchang Securities, citing Factset data, said analysts have been cutting their profit expectations for Honda one after another. Among 18 analysts, the median estimate for Honda’s 2026 EPS was lowered from $2.21 to $2.18. The distribution of market ratings for Honda’s stock is 7 buys, 14 holds, and 1 sell, indicating a divergence of views among investors about its outlook.

Honda’s Chief Executive Officer Toshihiro Mihara had previously acknowledged that frequently revised tariff policies in various countries have had a huge impact on the business, severely disrupting outlook planning. As Honda’s largest market, the United States contributed 1.4 million units of sales in 2024, of which nearly 40% came from exports from Japan—making tariff policies have far-reaching effects. Faced with the situation, Honda plans to invest about 10 trillion yen to advance its electrification transition by fiscal year 2030, but it has recently decided to cut part of the investment to 7 trillion yen, shifting the strategic focus toward hybrid powertrain models.

Faced with its difficulties, Honda announced a fundamental reassessment of its electrification strategy, sharply reducing its target for global all-electric vehicle sales in 2030 from 2 million units to 700k to 750k units, and decided to end its electric vehicle partnership with General Motors. At the same time, Honda announced that starting in April 2026, it will bring its vehicle R&D functions back to its in-house R&D subsidiaries, aiming to reverse the downturn by strengthening internal R&D.

Nissan is in an even more difficult position. According to its published fiscal year 2025 earnings outlook, Nissan expects net losses of 650 billion yen for the full fiscal year. The financial report shows that in the first nine months of fiscal year 2025 (from April to December 2025), Nissan’s global sales fell 5.8% year over year to 2.26 million units, and its cumulative net loss has already reached 250.2 billion yen (about RMB 204.3k). Even though it achieved operating profit in the third fiscal quarter, the scale of profits shrank significantly.

To improve its operating conditions, Nissan is pushing its “Re:Nissan” restructuring plan, including measures such as globally closing 7 factories and cutting 20k jobs. Through the experiences of Nissan and Honda, it can be seen that at the crossroads of industry transformation, the cost of failing to accurately grasp market timing is being presented in the most direct way through financial figures.

However, Toyota, another Japanese automaker, has not been able to avoid external shocks: in 2025 it maintained its strong position as the global sales leader, with full-year sales of 13.8k units, surpassing the Volkswagen Group to remain #1. Financial data shows that in calendar year 2025 (Japan’s fiscal year runs from April 1 to March 31 of the following year), Toyota achieved revenue of about 44.7 trillion yen (about RMB 2 trillion), up about 6.8% year over year; it generated net profit of about 3.7 trillion yen (about RMB 164.9 billion), down about 26% year over year, which puts its profit per vehicle at RMB 17k.

But Toyota also could not avoid external shocks: U.S. tariffs brought negative impact of 1.45 trillion yen, causing operating losses in its North American market. In addition, sales in the Asian region declined.