Honda’s Q3 Profit Plunges 61% to ¥153.4B: EV Losses & U.S. Tariffs Take a Bite
Another legacy automaker hits a pothole on the road to electrification.
Honda just reported a staggering 61% drop in quarterly profit, landing at ¥153.4 billion. The culprit? A one-two punch from its struggling electric vehicle division and the sting of U.S. tariffs. It's a stark reminder that pivoting a century-old business model isn't a simple software update.
The EV Drag
Forget the hype—building EVs at scale is brutally expensive. Honda's numbers reveal the raw cost of playing catch-up in a market where software and batteries trump traditional engine expertise. Development costs are soaring, supply chains are chaotic, and consumer adoption isn't hitting the exponential curves the boardroom presentations promised.
The Tariff Toll
Add geopolitical friction to the mix. U.S. trade policies are slicing into margins, proving that in the global auto game, factory location can be as critical as horsepower. It's a costly lesson in realpolitik for an industry built on just-in-time global logistics.
So, while executives tout their 'transformative mobility vision,' the balance sheet tells a different story—one of massive capital expenditure with uncertain returns. It's the kind of transition that makes old-school shareholders nostalgic for the simple, profitable days of combustion engines. A classic case of spending billions to potentially make less money—Wall Street's favorite kind of 'growth story.'
Honda’s financial results plunge across revenue, margins, and earnings
Honda’s sales revenue fell from ¥16.33 trillion to ¥15.98 trillion, a 2.2% drop. Operating profit sank from ¥1.14 trillion to ¥591.5 billion. Operating margin slid to 3.7% from 7.0%. Profit before income taxes declined 37% to ¥771.7 billion.
Net profit attributable to shareholders dropped to ¥465.4 billion from ¥805.2 billion. Earnings per share fell to ¥115.53 from ¥169.69. The average dollar rate changed to ¥149 from ¥153, adding more pressure.
For the full year ending March 31, 2026, Honda cut its outlook hard, with sales revenue now seen at ¥21.1 trillion, down 2.7% year over year. Operating profit is forecast at ¥550 billion, a 54.7% collapse. Operating margin is expected at 2.6%.
Honda’s profit before taxes is projected at ¥620 billion, down 52.9%. Net profit for shareholders is seen at ¥300 billion, a 64.1% drop. Earnings per share are expected at ¥75.05. The dollar is assumed at ¥148.
Motorcycles carry profits for Honda while auto unit bleeds cash
The motorcycle business kept the lights on. Group unit sales reached 16.44 million bikes. Operating profit hit ¥546.5 billion with a strong 18.6% margin. India and Brazil drove most of the demand. In Vietnam, clearer rules for combustion engines helped stabilize sales. Consumer confidence improved enough to limit declines.
The automobile unit told a different story. Vehicle sales totaled 2.561 million units. Operating profit came in at a ¥166.4 billion loss. The margin sat at minus 1.6%. That figure already includes the EV charges and tariff damage. Without those items, Honda estimated auto profit WOULD have matched last year at about ¥380.2 billion with a 3.6% margin over nine months.
Cash Flow held up. Operating cash flow after research and development adjustments reached ¥1.86 trillion, roughly flat from last year. That cushion gave Honda room to absorb losses without a funding crisis.
The company is now restructuring, with plans to settle losses tied to current North American EV models. Costs will be tightened, and profits from combustion and hybrid vehicles will be pushed harder, while new mid to long-term strategy is expected by the end of this fiscal year, according to the earnings report.
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