Honda cuts full-year profit forecast over tariffs and chip shortages

Core Viewpoint - Honda Motor Co. has revised its profit forecast downward for the fiscal year ending March 31, 2026, due to a significant drop in operating profit attributed to one-off expenses related to electric vehicles, semiconductor shortages, and U.S. tariffs [1] Financial Performance - The company has reduced its operating profit forecast for 2026 by 21% to 550 billion yen ($3.65 billion) from 700 billion yen, and has also lowered its 2030 global EV sales target from 30% to 20% [2] - For the six months ending September 30, 2025, Honda reported sales revenue of 10.63 trillion yen ($70.9 billion), marking a modest 1.5% decrease compared to the same period last year [2] - Operating profit for the period fell by 41% to 438.1 billion yen, while profit before income taxes decreased by 28.9% to 527.4 billion yen [3] Electric Vehicle Strategy - The company recorded 237.3 billion yen in combined losses and expenses related to EV model cancellations and manufacturing reductions, indicating significant restructuring costs associated with its revised electric vehicle strategy [3] - Honda has experienced lower EV sales units and higher sales incentives per unit than initially expected due to a slowdown in the electric vehicle market in North America and Europe [4] Market Conditions - The U.S. government's policy changes, including the abolition of tax incentives for EV purchases and the easing of emissions regulations, have prompted Honda to realign its strategy, anticipating a further slowdown in the U.S. EV market [5] - Despite these challenges, Honda remains committed to expanding its production capabilities in the U.S., emphasizing the importance of procuring batteries through a sustainable value chain [6] Production Plans - Honda plans to designate its existing auto plants in Ohio as the Honda EV Hub, which includes retooling existing facilities and constructing a new joint venture EV battery facility with LG Energy Solution [7] - The company is on track to ship 3.34 million vehicles by the end of the fiscal year on March 31, 2026, reflecting a reduction of 110,000 units in the North American region due to semiconductor shortages [7]