Maximum Loss Could Reach Nearly 30 Billion Yuan! Trillion-Dollar Auto Giant Explodes

Source: Manager Network

Due to the massive impairment caused by the strategic adjustment of electric vehicle operations, Japan’s second-largest automaker Honda expects its fiscal year ending March 2026 to record its first annual net loss since listing.

On March 12, Honda announced in its earnings forecast that the net profit attributable to shareholders of the parent company for fiscal year 2025 (April 2025 to March 2026) will turn into a loss of 420 billion to 690 billion yen (approximately 1.82 billion to 2.98 billion RMB). Previously, the company had expected to achieve a net profit of about 300 billion yen for that fiscal year.

Meanwhile, Honda also significantly lowered its operating profit forecast from the previously expected profit of 550 billion yen to a loss of 270 billion to 570 billion yen (about 1.17 billion to 2.46 billion RMB); pre-tax profit was adjusted from an expected profit of 620 billion yen to a loss of 310 billion to 650 billion yen (about 1.34 billion to 2.81 billion RMB).

After the earnings warning was announced, Honda’s U.S. stock price briefly dropped about 8% during trading. The stock closed at $26.09 on March 12, down 5.27%, reflecting investor concerns over rising costs associated with the automaker’s electrification transition.

Honda stated that the significant deterioration in performance mainly stems from reassessing its electric vehicle strategy and making large impairments on related assets. The company estimates that costs and asset impairments related to the electrification strategy adjustments could total up to 2.5 trillion yen (about 10.81 billion RMB).

In its statement, Honda said that the current automotive business faces an “extremely severe profit environment,” and the company has decided to reevaluate its previous electrification investment plans to adapt to changes in global market demand and competitive landscape.

As part of this strategic shift, Honda has decided to cancel several electric vehicle projects planned for North America, including the “Honda 0 SUV,” “Honda 0 Saloon,” and the luxury brand Acura’s RSX electric crossover. The company indicated that after canceling these projects, there will be a one-time impairment of R&D investments, production preparations, and related assets.

In addition to changing demand in North America, Honda is also under significant pressure in the Chinese market for failing to keep pace with the electrification and intelligentization competition.

Data shows that in February this year, Honda China’s sales were only 28,780 units, down 15% year-on-year; in the first two months of this year, total sales were 86,269 units, a 16% decline year-on-year.

The sluggish sales in China have greatly impacted Honda’s global performance. In 2025, Honda sold a total of 3.522 million units worldwide, down 7.5% year-on-year. However, in China, the full-year sales were only 645,000 units, a 24% decrease, marking Honda’s fifth consecutive year of decline in China.

Specifically, after reaching a peak of 1.627 million units in 2020, Honda’s sales in China have declined year by year. The terminal sales for 2021 to 2024 were 1.5615 million, 1.3731 million, 1.2342 million, and 852,300 units respectively, with further shrinkage expected in 2025.

Currently, Honda in China mainly relies on two joint ventures: GAC Honda and Dongfeng Honda. However, both face operational difficulties.

GAC Honda’s sales in February this year were 9,220 units, down 68.93% year-on-year; from January to February, the total was 13,778 units, a 69.24% decline, making it the lowest-performing brand within GAC Group.

Dongfeng Honda’s February sales were 18,025 units; from January to February, total sales were 30,592 units, down 18.6% year-on-year.

The performance forecast also indicates that assets related to Honda’s China operations are included in the impairment assessment. Management believes that Honda still needs to improve its competitiveness in intelligent software capabilities and product development speed to cope with rapid changes in the local market.

From Honda’s strategic shift, the company is moving away from solely investing in pure electric vehicles and instead focusing on hybrid models. However, if Honda cannot keep up with Chinese consumers’ demands for intelligent features, relying on hybrid vehicles alone will make recovery very difficult.

Source: Manager Network

Editor: Cao Zian