Honda Motor forecasts a significant 59% profit decrease for the current financial year. They also stated they will postpone their plan to establish an EV supply chain in Canada. This decision is attributed to uncertainty arising from former U.S. President Donald Trump’s tariffs.
The automaker projects operating income to reach 500 billion yen ($3.38 billion) in the year ending March 31, 2026. This is a sharp decline from the 1.21 trillion yen in the prior year.
Honda’s forecast highlights the challenges automakers face. They are navigating Trump’s tariffs on foreign-made automobiles while simultaneously dealing with the rise of Chinese EV producers.
Honda stated they would postpone their April 2024 plan to build an EV supply chain in Ontario, Canada for “approximately two years.” The company cited the present slowdown in EV demand as the reason for this delay.
Earlier in the year, talks about a potential merger between Honda and Nissan ended. However, both companies maintain an agreement to collaborate on technology. Such collaborations are deemed more and more important for automakers to compete with quick moving EV companies, particularly those from China.
“Although the automotive industry is in a very difficult situation, we will definitely look for new directions of growth through strategic partnerships,” Honda’s chief executive, Toshihiro Mibe, said at a news conference. He clarified that there have been no new developments regarding a potential partnership with Nissan since talks were abandoned in February.
Honda anticipates tariffs in various countries will negatively impact their fiscal 2026 operating profit by 650 billion yen. Around 300 billion yen of this impact is due to tariffs on imports of roughly 550,000 finished cars. The company projects they can offset approximately 200 billion yen of the tariff impact through mitigation efforts.
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