Honda CEO Toshihiro Mibe Takes Pay Cut but Stays On After First Loss in 70 Years Due to China Setback

Honda CEO Toshihiro Mibe has recently faced criticism from retired senior executives, who accused him of neglecting the Chinese market during his tenure, leading the company to its first annual net loss in 70 years. Since assuming office in 2021, Mibe has rarely visited China and missed key domestic auto shows. Under his leadership, Honda’s market share in China has plummeted from 8% in 2020 to less than 3%. He has also been criticized for over-investing in golf sponsorships and pursuing an unrealistic electric vehicle (EV) strategy, which has dampened team morale. In March 2024, Mibe visited China for an on-site assessment and acknowledged a significant gap between Japanese and Chinese automakers, admitting that Honda had clearly fallen behind in its development pace. To address the crisis, Honda plans to reduce costs through localized procurement and introduce intelligent driving technologies to improve its performance in China. However, the company’s fiscal year 2025 financial results revealed a net loss of ¥423.9 billion. Against this backdrop, Honda has abandoned its original goal of achieving full electrification by 2040, halted development of multiple EV models, and decided against spinning off its EV business. The persistently loss-making automobile division has also dragged down the otherwise profitable motorcycle segment, intensifying internal tensions. Additionally, policy pressures in the North American market and low consumer acceptance of EVs in Japan have further hampered Honda’s transformation efforts. Despite mounting criticism, Honda’s board has decided to retain Mibe as CEO but imposed a 30% salary reduction for three months due to his poor performance.