Honda Posts First Annual Loss in Nearly 70 Years, Shifts Focus to Hybrids and Regional Differentiation

Honda has reported its fiscal year 2025 results, revealing its first annual loss since going public in 1957. The company posted an operating loss of JPY 414.3 billion (approximately RMB 17.8 billion) and a net loss attributable to owners of parent of JPY 423.9 billion (approximately RMB 18.2 billion). The primary cause was losses related to its battery electric vehicle (BEV) business, which amounted to JPY 1.58 trillion (approximately RMB 67.9 billion). Excluding this BEV-related impact, Honda’s adjusted operating profit would have been approximately RMB 44.7 billion, down 14.4% year-over-year. Its core automotive business recorded an operating margin of just 0.3%. President Toshihiro Mibe stated the company would “stop the bleeding as soon as possible” and confirmed he would remain as president but step down as chairman of the board. Over the next three years, Honda will reallocate resources, shifting strategic focus toward hybrid electric vehicles (HEVs), cost reduction, operational efficiency, and region-specific market strategies. North America, Japan, and India are now prioritized markets, while China is no longer a short-term priority for sales growth. In FY2025, Honda sold 3.387 million vehicles globally, a decline of 329,000 units year-over-year, including a drop of 199,000 units in China. Over the past five years, its sales in China have fallen by more than 50%. In response to intense competition in the Chinese market, Honda plans to overhaul its China operations by adopting more locally standardized components, integrating domestic intelligent technologies, and collaborating with Dongfeng and GAC to develop new models based on China-local platforms. GAC Honda will gain greater autonomy in product definition and development and aims to launch three new models by 2027, including vehicles developed on a dedicated new energy platform, equipped with cockpit and advanced driver-assistance systems from local suppliers such as Huawei and Momenta. In North America, Honda will redirect some production capacity toward internal combustion engine (ICE) and hybrid vehicles, enhance HEV manufacturing capabilities, cancel plans to launch three previously announced EV models in the U.S., terminate its joint venture with Sony aimed at selling EVs, and indefinitely suspend its Canada EV value chain project (originally slated for an investment of approximately USD 11 billion). Honda has abandoned its previous target of achieving 100% electrification (comprising BEVs and fuel cell vehicles) for all new vehicles by 2040, pivoting instead toward a hybrid-focused strategy. The company plans to introduce a new generation of hybrid models starting in 2027 and roll out 15 such models globally by the fiscal year ending March 2030. Battery electric vehicles will continue to be sold in Japan and other Asian markets, while Honda will monitor evolving market demand in North America before making further decisions. Additionally, Honda plans to launch strategic models specifically developed for the Indian market beginning in 2028, leveraging its strong local motorcycle business—which sells nearly 6 million units annually—to encourage customers to upgrade to entry-level automobiles.