Honda hit by tariffs in Q1, but lifts annual outlook
TOKYO : Japanese car giant Honda said today its net profit halved in the first quarter (Q1) because of US tariffs, but upgraded its annual profit forecast after Tokyo finally hammered out a trade deal with Washington.
'In the first three months of its fiscal year, which begins in April, net profit fell to ¥196.67 billion (US$1.33 billion), a drop of 50.2% year-on-year,' the firm said.
Revenue dipped 1.2% to ¥5.34 trillion.
The Trump administration in April imposed a 25% levy on Japanese cars imported into the US, dealing a hefty blow to Japan and its crucial auto sector.
However, Honda, Japan's second-biggest automaker after Toyota, has managed to withstand the pressure better than its Japanese competitors.
More than 60% of the vehicles it sells in the US are built there, the highest percentage of all major Japanese automakers, according to Bloomberg Intelligence auto analyst Tatsuo Yoshida.
'Despite tariff impacts and one-time expenses related to investment in electric vehicles, sales in the US 'remained strong', rising 1.2% year on year in yen terms,' Honda said.
Under a deal by Tokyo and Washington announced in July, tariffs on Japanese autos will fall to 15%, although this has yet to take effect.
Other Japanese imports will be subject to a 15% 'reciprocal' tariff, down from a threatened 25%.
Without specifying its calculations, Honda said today that it had significantly revised downward the gross impact of the US tariffs on its annual results, to ¥450 billion, 'based on a detailed review'.
As a result, it now expects only a 50% drop in its net profit for the 2025-2026 fiscal year, to ¥420 billion, compared with the previously anticipated collapse of 70%.
It now sees an annual revenue decline of 2.7%, compared with the previously forecast drop of 6.4%.
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