Honda Posts ¥423.9 Billion Net Loss in FY2025, First Annual Deficit Since IPO 69 Years Ago

Honda reported a net loss of ¥423.9 billion (approximately RMB 18.2 billion) for fiscal year 2025, marking a 150.72% year-over-year decline and representing the company’s first annual loss since its listing in 1957. The primary cause was a comprehensive overhaul of its pure electric vehicle (EV) strategy. In March 2025, Honda announced the cancellation of three EV models originally slated for production in North America—the Honda 0 Series SUV, Honda 0 Series sedan, and Acura RSX—citing a sharp decline in current EV demand and warning that proceeding with these projects would result in even greater long-term losses. This decision rendered related R&D expenditures as sunk costs and triggered expenses including impairment of fixed assets and compensation for supplier contract terminations. Altogether, the strategic shift in electrification has incurred losses totaling approximately ¥2.5 trillion (around RMB 108.2 billion) over two fiscal years. In response, Honda is revising its investment priorities for the next three years: reducing planned investments in pure EVs to ¥800 billion while allocating ¥4.4 trillion toward hybrid and gasoline-powered vehicles. In North America, the company aims to expand its hybrid lineup by 2029, positioning high-margin HEVs as the core profit driver during the transition period. In China, Honda’s market share has plummeted from a previous 8% to below 3%, pressured by intensifying competition from domestic brands. The company forecasts a return to profitability in fiscal year 2026, with a projected net profit of ¥260 billion and EV-related losses narrowed to approximately ¥500 billion.