Honda's Quarterly Operating Profit Falls Over 60% Year-on-Year

• Operating profit of 153.4 billion yen missed the analyst consensus of 174.5 billion yen and was significantly below the 397.3 billion yen earned in the same quarter last year
• This marks the fourth consecutive quarter of year-on-year profit decline for Japan's second-largest automaker
• Key headwinds include U.S. import tariffs and shifting market conditions in the electric vehicle sector

Summary: Honda's Q3 Operating Profit Plunges 61.4%

Key Financial Performance:

Honda Motor reported third-quarter operating profit of 153.4 billion yen ($987.07 million), representing a 61.4% year-on-year decline from 397.3 billion yen in the same period last year. The result also missed analyst expectations of 174.5 billion yen (average forecast from nine analysts polled by LSEG).

Consecutive Decline Trend:

This marks Honda's fourth consecutive quarter of year-on-year profit decline, indicating sustained pressure on the automaker's financial performance.

Primary Challenges:

Two main factors contributed to the weak results:

1. U.S. import tariffs impacting profitability
2. Changing market dynamics in the electric vehicle (EV) sector

Company Context:

Honda is Japan's second-largest automaker after Toyota Motor, making this significant profit decline notable for the broader Japanese automotive industry.

Market Implications:

The substantial profit drop highlights ongoing challenges facing traditional automakers as they navigate the transition to electric vehicles while managing trade policy headwinds. U.S. tariffs continue to pressure Japanese manufacturers with significant American market exposure. The "changes in the market environment for electric vehicles" suggests Honda may be struggling with either EV adoption rates, competition, or the costs associated with electrification investments.

The consecutive quarterly declines raise concerns about Honda's near-term outlook and its competitive positioning in the rapidly evolving automotive landscape, particularly in the critical U.S. market and the global EV transition.

Exchange Rate: $1 = 155.41 yen (as of reporting date: February 10)