Honda posts historic loss, pivots from EVs as policy shifts reshape strategy
Shares rise on 2026 profitability forecasts despite first operating loss since 1957
Honda Motor Co. has reported its first operating loss since 1957, recording a deficit of 413.4 billion yen for the fiscal year ending in March. The Japanese carmaker, which began selling cars in the early 1960s, attributed the historic shortfall to significant write-downs in its electric vehicle operations and a broader strategic recalibration. The company also posted a net loss of 423.9 billion yen, reflecting the scale of the financial hit taken during its transition away from aggressive electrification targets.
Global four-wheeled vehicle sales fell to 3.4 million units, down from 3.7 million in the previous fiscal year. However, the company’s long-standing motorcycle division helped mitigate the losses, with sales rising to 22.1 million units from 20 million. This performance was driven largely by strong demand in India for budget Super Cub models, a segment where Honda has maintained dominance since the 1950s.
The shift in strategy was heavily influenced by policy changes in the United States, Honda’s largest market. The company cited the withdrawal of tax incentives for EV buyers under the Trump administration, specifically referencing the “Big Beautiful Bill” of September 2025, as a key factor in reduced demand. Additionally, tariffs on imported cars and parts, which were reduced from 25% to 15%, continued to impact profitability.
In response to these market conditions, Honda is scaling back its EV ambitions. The company recently cancelled the planned development of two electric cars in partnership with Sony and displayed new hybrid prototypes, including a family sedan and an SUV, to align with current US consumer preferences. CEO Toshihiro Mibe stated that while the company remains committed to carbon neutrality, it must prioritise hybrids and internal combustion engines alongside future EV technologies.
Despite the record loss, Honda shares rose sharply in early trading, reaching an 8% increase, as investors reacted positively to forecasts predicting a return to profitability in the fiscal year ending March 2026. Mibe confirmed he would not resign, preferring to focus on the company’s revival plan. The announcement comes amid broader struggles for Japanese automakers, with Toyota forecasting a 22% drop in net income and Nissan reporting a $3.4 billion loss.
