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The logo signboard of Japanese automaker Honda Motor atop a showroom in Tokyo on Feb. 6, 2025.Key Takeaways
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Honda Motor said new U.S. auto tariffs will send profits and sales tumbling.
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CEO Toshihiro Mibe noted that Honda sees a $4.40 billion negative impact from the tariffs this year.
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Honda is also postponing investments in electric vehicles and batteries in Canada because of falling demand.
U.S.-listed shares of Honda Motor (HMC) fell 6% Tuesday when the Japanese automaker warned it will have a significant drop in profit because of uncertainty over new U.S. tariffs. It will also postpone plans for a new Canadian electric vehicle supply chain as demand for EVs slides.
For the fiscal year ending March 31, 2026, Honda sees net profit slumping 70% year-over-year to 250.0 billion yen ($1.69 billion). It expects operating profit declining 59% to 500.0 billion yen ($3.38 billion), and sales to fall 6.4% to 20.30 trillion yen ($137.27 billion).
Honda Director, President, and Representative Executive Officer Toshihiro Mibe explained in the call with analysts that the tariffs would have a negative impact of JPY650 billion ($4.40 billion) in the current fiscal year. "I think the tariff impact will continue to change as time goes by, and we have to think about these major changes taking place," Mibe said, according to a transcript provided by AlphaSense.
Mibe noted that Honda was already looking at ways to respond, saying that "if the tariff measures are to be in place for a long time, then we will have to increase our production capacity in the United States."
Honda Postponing EV Operation in Canada
Mibe also pointed out that its plan announced in April 2024 of an EV operation in Canada would be put on hold for at least two years since "in North America, the EV market growth is slowing down."
Despite today's losses, U.S.-listed shares of Hondo Motor are up slightly year-to-date.
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