Honda has reported its first operating loss since 1957 following a major restructuring of its electric vehicle strategy in the United States.
Japan’s second-largest automaker after Toyota announced on Thursday that it recorded an operating loss of 414.3 billion yen ($2.6 billion) for the last financial year.
The company said the losses were largely driven by massive accounting charges linked to its electric vehicle operations.
Honda also posted a net loss of 423.9 billion yen, marking its first consolidated net loss since it began reporting such figures in 1977.
Despite the setback, the automaker projected a recovery for the current financial year, forecasting a net profit of 260 billion yen and operating income of 500 billion yen.
The stronger-than-expected outlook pushed Honda’s shares up by nearly eight per cent during trading.
In March, Honda announced it was cancelling the launch and development of certain electric vehicle models in the United States.
The decision resulted in impairment and restructuring charges totaling 2.5 trillion yen, equivalent to about $16 billion.
The company blamed the move on policy changes introduced by the administration of Donald Trump, including import tariffs and the removal of tax incentives for EV buyers.
Honda also pointed to declining competitiveness in China and other Asian markets as another major challenge.
The company joins several Japanese automakers currently struggling with rising global economic pressures, trade tensions and increasing competition from Chinese electric vehicle manufacturers.
Toyota recently forecast a 22 per cent decline in net income for the current fiscal year despite earning about $25 billion last year.
Meanwhile, Nissan reported a net loss of $3.4 billion for the previous year as it continues factory closures and workforce reductions.
Bloomberg Intelligence analyst Tatsuo Yoshida said Honda’s situation differs significantly from Nissan’s because Honda still maintains strong product appeal and profitability in other business segments.
“Its internal combustion engine and hybrid products are strong, and its brand power is high,” Yoshida said.
He also noted that Honda continues to perform well in motorcycles and financial services.
The financial strain on Japanese automakers comes amid broader global uncertainty, including ongoing trade disputes and changing US tariff policies.
Japan previously agreed to invest $550 billion in the United States by 2029 in exchange for reduced tariffs on exports, although trade conditions remain uncertain after recent legal and policy changes in Washington.
