Honda Motor quarterly profit halves, missing estimates as U.S. auto tariffs bite

Japanese auto large Honda‘s first-quarter working earnings fell 50% yr over yr on Wednesday, lacking estimates as a result of U.S. auto tariffs and a stronger yen.

Listed here are Honda’s outcomes in contrast with the imply estimates from LSEG:

Income: 5.34 trillion yen vs. 5.25 trillion yenOperating revenue: 244.17 billion yen vs. 323.48 billion yen

Within the first quarter of its fiscal yr, which ends on March 31, 2026, Honda’s income got here in at 5.34 trillion yen, beating imply estimates from LSEG.

Working revenue fell about 50% to 244.17 billion yen, lacking LSEG’s imply estimates of 323.48 billion yen.

Nonetheless, Japan’s second-biggest carmaker stated that the influence of the auto tariffs can be smaller than beforehand anticipated. The corporate additionally forecast the yen to weaken additional, because it raised its full-year working revenue forecast by 200 billion yen, or 40%, to 700 billion yen in comparison with its earlier forecast of 500 billion yen.

A Honda govt stated in an earnings name that the influence of tariffs can be mitigated by Honda’s manufacturing crops within the U.S. 

“Our native manufacturing manufacturing ratio is excessive to start with… our stance is to supply the place there’s demand,” he stated, including that it could search for methods to extend manufacturing quantity within the U.S. with out spending an excessive amount of on the capital funding.

The corporate can be contemplating increase manufacturing stateside for its new power autos to keep away from tariffs.

Shares of Honda rose 1.7% after its earnings launch earlier than paring positive factors.

The corporate’s motorbike enterprise noticed its gross sales increase in markets like Brazil and Vietnam to realize its highest-ever quarterly working revenue. In the meantime, Honda famous that its electrical automobile gross sales remained robust in North America. 

The U.S. accounted for round 1 / 4 of Honda’s exports from Japan within the first half of the yr. Its world gross sales fell 5% over the interval, impacted by declines in China, Asia and Europe.

Auto exports to the U.S. are a cornerstone of Japan’s financial system, making up 28.3% of all shipments in 2024, Japan’s customs information confirmed.

Japan’s carmakers have been doubling down on value cuts to retain market share within the U.S. after President Donald Trump’s 25% tariffs on imported autos, which got here into impact on April 3. 

Trump introduced a brand new commerce take care of Japan on July 22 that’s stated to incorporate a decrease tariff fee of 15% on Japan-made automobile imports to the U.S. Nonetheless, the timeframe for the change to take impact was not clarified.

In June, the worth of Tokyo’s automotive exports to the U.S. fell 25.3% yr over yr, though automotive export volumes to the U.S. rose by 4.6% in the identical interval, in keeping with information from Japan’s commerce ministry.

Different Japanese automotive makers have additionally been affected by commerce headwinds. On July 30, Japan’s Nissan reported a web lack of 115.8 billion yen for the primary quarter, attributing antagonistic alternate fee actions and the influence of U.S. tariffs.

Toyota, Japan’s largest carmaker, is ready to report earnings on Thursday, with economists polled by Reuters anticipating that it’ll put up its lowest working revenue in over two years. That comes regardless of the corporate reporting that its worldwide gross sales reached document highs within the first six months of the yr.

Again in February, Honda and Nissan terminated talks over a $60 billion merger, which might have created the world’s third-largest automaker by gross sales quantity.

Japanese Prime Minister Shigeru Ishiba stated Monday he wouldn’t hesitate to talk with President Donald Trump to make sure the reduce to U.S. vehicle tariffs is carried out quickly.

The nation’s chief commerce negotiator Ryosei Akazawa left for Washington on Tuesday, searching for to press Trump to signal an govt order that may affirm the precise date for the auto tariffs to be lowered.