Honda Cuts Annual Outlook Amid Rising Competition from Chinese Automakers

Honda has slashed its annual profit forecast by 20%, citing escalating costs in electric vehicle production and semiconductor supply chain disruptions. The automaker now expects operating profit of 550 billion yen ($3.6 billion) for the year through March 2026, down from an earlier projection of 700 billion yen ($4.5 billion).

The company attributes part of the decline to U.S. tariffs, though it revised the estimated loss to 385 billion yen ($2.6 billion) from 450 billion yen ($2.9 billion). Shares dropped 4.7% at one point on Monday as investors grew wary of Japan's diminishing automotive influence in Southeast Asia.

Executive Vice President Noriya Kaihara acknowledged intense competition in markets like Thailand, where Honda has lost its pricing edge. "The competitive landscape is quite intense," Kaihara said during a media briefing. Automakers now face pressure to reduce prices and ramp up promotions to retain customer interest.

Vehicle sales guidance was trimmed to 3.34 million units following China's export halt of Nexperia semiconductors. While supply constraints are easing, Honda's production recovery remains fragile.