Honda Cuts Profit Forecast by 21% Amid EV Costs, China Sales Slump, and Chip Shortage

Honda Motor Co. has revised its full-year profit forecast downward by 21%, citing heavy electric vehicle (EV) expenses, weak sales in China and other Asian markets, and a chip shortage impacting production. Japan’s second-largest automaker now expects an operating profit of 550 billion yen ($3.65 billion) for the fiscal year ending March 2026, down from its earlier projection of 700 billion yen.

For the first half of the fiscal year, Honda’s automobile division reported an operating loss largely due to 224 billion yen in one-time EV-related expenses. The company has also reduced its 2030 global EV sales target to 20%, compared to the previous goal of 30%. Honda now forecasts sales of 925,000 vehicles in Asia, including China—more than 10% lower than its prior target of 1.09 million units.

Executive Vice President Noriya Kaihara noted that fierce competition from Chinese automakers in Southeast Asia has led local firms to offer higher incentives and lower prices. “We recognise that a fundamental review is necessary for Asia,” Kaihara said, adding that no major new models will be launched through the next fiscal year.

The company also faces a 150 billion yen impact from a shortage of chips supplied by Dutch firm Nexperia, forcing temporary production halts at plants in Mexico, the U.S., and Canada. Kaihara stated that normal operations are expected to resume by the week of November 21.

Additionally, Honda anticipates a 385 billion yen hit from U.S. tariffs—65 billion yen less than previously expected—while benefiting from strong hybrid vehicle demand and high local production in North America. The automaker’s operating profit for July–September fell 25% year-on-year to 194 billion yen, while its motorcycle business remained resilient thanks to strong sales in Brazil and Thailand despite weaker demand in Vietnam.