Honda Motor Co. reported a steep 50% decline in operating profit for the first quarter, as the Japanese automaker grappled with punishing U.S. tariffs and costly electric vehicle missteps that overshadowed strong motorcycle performance.
Operating profit fell to ¥244.1 billion ($1.66 billion) for the three months ended June 30, down from ¥484.7 billion ($3.30 billion) a year earlier. The results missed analyst expectations and reflected the mounting pressures facing traditional automakers as they navigate trade tensions and an increasingly challenging EV transition.
Honda absorbed a ¥124.6 billion ($849 million) hit from tariffs imposed on vehicle imports to the United States. The company also booked ¥113.4 billion ($773 million) in one-time expenses related to its struggling electric vehicle operations, including provisions for losses on EVs sold in the U.S. and write-offs of development assets due to lineup changes.
The results underscore Honda’s difficulties in adapting to rapidly shifting automotive dynamics. The automaker announced plans to scale back EV investments by over $20 billion and refocus on hybrid vehicles as demand for fully electric cars weakens.
Yet Honda’s motorcycle division provided a rare bright spot, achieving its highest-ever quarterly operating profit as sales expanded in Brazil and Vietnam. The two-wheeler business has emerged as a reliable profit engine for the company across emerging markets.
Despite the weak quarterly showing, Honda raised its full-year operating profit forecast to ¥700 billion ($4.78 billion) from an earlier projection of ¥500 billion ($3.41 billion). The upgrade reflects expectations of reduced tariff impact following negotiations between the U.S. and Japan, as well as benefits from a weaker yen that boosts overseas earnings when converted back to the home currency.
Honda estimates the full-year negative impact from tariffs at approximately ¥450 billion ($3.07 billion) based on detailed reviews. The company continues to benefit from its substantial U.S. manufacturing footprint, which shields many of its popular models from import duties.
