Honda Motor raised its annual profit forecast to reflect softer than initially indicated US import tariffs on Japanese goods, although those levies weighed on the company’s latest quarterly performance.
The carmaker now sees ¥700 billion (R83 billion) in operating profit for the fiscal year ending March 2026, it said Wednesday.
That compares with the prior guidance for ¥500 billion and analysts’ average estimate for ¥896 billion.
Profit was ¥244 billion for the three-month period between April and June, falling short of analysts’ prediction for ¥310 billion, after a ¥125 billion negative impact from tariffs.
Sales fell 1% to ¥5.3 trillion in the quarter.
Honda’s updated profit forecast signals cautious optimism despite continued uncertainty from US tariffs. Japanese carmakers were bracing for billions in losses; the trade pact agreed upon last month averted what they called their “worst case scenario,” after negotiations led Trump to impose tariffs of 15% for Japan.
The reduction “is of course going to have a positive impact,” Honda’s Chief Financial Officer Eiji Fujimura told reporters. “Free trade leads to the kind of global competition that provides customers with the best products.”
Honda now expects a gross impact of ¥450 billion from the trade levies, down from the previous forecast of ¥650 billion.
About half of the ¥200 billion revision comes from price hikes in the US, Fujimura said.
This was calculated under the scenario that tariffs take effect in September, said Masao Kawaguchi, head of Honda’s accounting and finance supervisory unit, though he said it’s unclear when they’ll actually kick in.
Honda kept its full year unit sales volume forecast the same, at 3.62 million vehicles.
The company said its motorcycle business remained robust during the first quarter, raking in ¥189 billion in profit at a record 20% margin, mainly due to growth in Brazil and Vietnam.
In contrast, its automobile segment lost almost ¥30 billion as sales weakened across Asia, with a sharp drop in China.
“The motorcycle business was a standout,” according to Bloomberg Intelligence senior auto analyst Tatsuo Yoshida.
“Once the challenging conditions in China and other parts of Asia begin to ease, Honda’s earnings could shift to an even higher level.”
The US represents the biggest market for five of Japan’s largest automakers, including Honda.
The company sold roughly 1.4 million cars in the US in 2024, according to BI, almost 40% of which were imported.
Honda also said it was postponing plans to establish an electric vehicle supply chain in Ontario, Canada, by two years, owing to a downturn in demand.
The previously announced plan included a battery plant and an EV factory with an annual production capacity of 240,000 vehicles.
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