Honda forecasts profit recovery after first ever annual loss

Published Thu, May 14, 2026 · 01:53 PM

[TOKYO] Honda Motor forecasts a rebound in operating profit for the current fiscal year, even after an ill-timed bet on electric vehicles led to a writedown and a record loss.

The manufacturer of cars and motorcycles sees a profit of 500 billion yen (S$4 billion) for the period ending March 2027, higher than the consensus estimate of 212.4 billion yen. It posted a 414.3 billion yen shortfall during the previous year, its first annual loss since it was founded in 1948.

Honda has struggled to keep up with intense competition as the global automobile industry shifts towards electrification and automation. Honda has insufficient models to tap into renewed demand for gas-electric hybrids in the US, while in China local brands churning out EVs have all but taken over what is now the world’s largest car market.

The onus now falls on CEO Toshihiro Mibe to stem further losses and stabilise Honda’s automobile business before it becomes too much of a burden for its more profitable motorcycle unit.

Honda will roll out 15 new hybrid models by March 2030, primarily in North America, Mibe said at a news conference, as part of its effort to reallocate resources away from EVs and towards mixed powertrain vehicles. Meanwhile, plans to build an EV battery supply chain in Canada are indefinitely on hold, he added.

The company is also aiming to get its four-wheeler business back on its feet within three years, Mibe said, with North America, India and Japan identified as core markets. Still, automobile and motorcycle unit sales are forecast to grow this fiscal year, he said.

“The management group there has been shielded too long by a super profitable motorcycle business that allows them to push problems with the automotive business under the rug,” said Christopher Richter, a senior analyst at CLSA Securities Japan. “The motorcycle business has become a crutch for Honda that prevents them from taking a serious look at their automotive business.”

Almost one in three motorcycles sold globally carries the Honda badge. The unit generates a majority of the company’s operating profit despite accounting for less than a fifth of sales.

A host of geopolitical challenges – war in the Middle East, US tariffs and a shortage of Chinese semiconductors – have only added to the challenges faced by global carmakers as they navigate the transition towards EVs and software-focused development.

Honda first sounded the alarm of a costly slowdown in EV demand in early February. Soon after that, it warned of a massive impairment charge that led to it scrapping plans with Sony Group to co-develop EVs just months before the first vehicles were set to roll off production lines.

Honda said in March that it’s looking to strengthen its hybrid-vehicle lineup by reallocating resources and streamlining products so that it can raise production, especially in North America. It’s also aiming to enhance its business in India, which is a growth market both for cars and motorcycles. BLOOMBERG