Honda Motor Co. has reported a sharp fall in quarterly operating profit, underscoring mounting pressure on the Japanese automaker as trade costs and softer electric vehicle demand continue to weigh on performance.
Operating profit for the third quarter fell 61.4% year-on-year to ¥153.4 billion, down from ¥397.3 billion in the same period last year. The result missed the average analyst forecast of ¥174.5 billion and marked Honda’s fourth consecutive quarterly decline in operating profit.
Honda said the weaker performance reflected the impact of U.S. tariffs and slowing demand in key markets, including electric vehicles, which have pressured margins and limited pricing flexibility. Higher costs and increased sales incentives also weighed on profitability during the period.
Despite the sharp quarterly drop, Honda maintained its full-year operating profit forecast of ¥550 billion for the fiscal year ending March. The company did not revise its outlook for sales volumes or pricing conditions.
The automobile division recorded an operating loss over the first nine months of the fiscal year, highlighting the extent of the pressure on Honda’s core business as it navigates shifting market conditions and rising competitive intensity.
Global automakers have faced a more challenging environment over the past year, with trade friction and dipping electric vehicle demand reshaping earnings across the sector. Japanese manufacturers, in particular, have been exposed to the impact of tariffs on exports to the United States, while also contending with currency volatility.
Honda has been gradually expanding its electrification strategy but remains more reliant on internal combustion engine vehicles than some peers. Slower-than-expected growth in electric vehicle demand has complicated the transition, forcing manufacturers to balance investment requirements against near-term profitability.
Investors will now look to Honda’s fourth-quarter performance for signs of stabilisation, particularly in North America, where pricing, incentives, and tariff exposure are most acute. The company is expected to provide further detail on its outlook when it reports full-year results later this spring.
