By Kosaku Narioka

Honda Motor suffered a loss in its car business, hit by U.S. tariffs and electric vehicle-related impairments in the latest quarter, forcing the company to rethink its electrification strategy in major markets like the U.S.

The Japanese automaker booked 43.4 billion yen, or nearly $280 million, in one-time EV-related provisioning and impairments for the three months ended December. That brought the nine-month total to the equivalent of about $1.7 billion, as it booked provisions for losses and impairment on EVs sold in the U.S. and wrote down EV development assets due to lineup changes.

Executive Vice President Noriya Kaihara on Tuesday said the company needed to drastically change its EV strategy in the U.S., where the market is clearly slowing, and to scrap its previous plans in China.

Kaihara said Honda EVs in China aren't good enough to compete with local models on pricing and user experience. To improve its competitiveness, Honda will have to fully tap local suppliers, he said.

The company's EV recalibration is the latest example of automakers pulling back from EVs amid regulatory changes and lackluster demand in major markets like the U.S.

Honda's auto production in North America was also hit by a shortage of chips from Dutch supplier Nexperia late last year amid a dispute between the Dutch and Chinese governments over control of the semiconductor maker.

The company said third-quarter operating profit slumped 61% to Y153.3 billion, hurt by a Y125.5 billion tariff hit.

Honda's car business suffered an operating loss of Y93.4 billion in the quarter, compared with profit of Y144.5 billion a year earlier, as vehicle sales were dragged by North America.

Operating profit from its financial-services business, which provides retail lending and leasing to support car sales, dropped 9.1% to Y74.7 billion. Its motorcycle business was a bright spot, with operating profit rising 1.4% to Y178.2 billion as Asia, excluding Japan, led vehicle sales growth.

For the fiscal year ending March, Honda projected revenue to decline 2.7% to Y21.100 trillion, up from its previous forecast of Y20.700 trillion. The company continues to expect net profit to drop 64% to Y300.00 billion.

Honda said a weaker yen and a smaller estimated tariff burden are likely to help its full-year earnings, but it left its profit guidance unchanged, partly because of stiffer competition in Asian car markets. The company also said it is closely monitoring supply risks involving rare earths and memory chips.

Honda maintained its annual car and motorcycle sales forecasts at 3.34 million units and 21.30 million units, respectively.

Rival Toyota Motor on Friday raised its annual earnings guidance despite a projected $9 billion U.S. tariff hit, after better-than-expected quarterly results driven by stronger sales in Japan and North America. Toyota said Chief Financial Officer Kenta Kon will become its new chief executive, effective April 1, to address profitability issues.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

February 10, 2026 08:07 ET (13:07 GMT)

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