3 days ago
Honda raises annual profit guidance despite U.S. tariff impact
Honda raised its annual profit forecast even as its quarterly figure took a hit from U.S. President Donald Trump's tariffs on cars and car parts imported to the United States.
The carmaker now sees ¥700 billion ($4.7 billion) in operating profit for the fiscal year ending March 2026, it said Wednesday. That compares with the prior guidance for ¥500 billion and analysts' average estimate of ¥896 billion.
Profit was ¥244 billion for the three-month period between April and June, falling short of analysts' prediction for ¥310 billion, after a ¥125 billion negative impact from tariffs. Sales fell 1% to ¥5.3 trillion in the quarter.
Honda's updated profit forecast signals cautious optimism despite continued uncertainty from U.S. tariffs. Japanese carmakers were bracing for billions in losses; the trade pact agreed upon last month averted what they called their "worst case scenario,' after negotiations led Trump to impose tariffs of 15% for Japan.
Honda now expects a gross impact of ¥450 billion from the trade levies, Chief Financial Officer Eiji Fujimura said, down from the carmaker's previous forecast for ¥650 billion. He kept the full year unit sales volume forecast the same, at 3.62 million vehicles.
The upward revision to operating profit was because of the tariff level and foreign exchange outlook, according to Honda. Its motorcycle business remained robust, mainly due to growth in Brazil, while its automobile segment decreased across Asia, with a sharp drop in China.
The United States represents the biggest market for five of Japan's largest automakers, including Honda. The company sold roughly 1.4 million cars in the U.S. in 2024, according to Bloomberg Intelligence, almost 40% of which were imported.
Honda also said it was postponing plans to establish an electric vehicle (EV) supply chain in Ontario, Canada, by two years, owing to a downturn in demand. The previously announced plan included a battery plant and an EV factory with an annual production capacity of 240,000 vehicles.
