On the Dash:
- Honda raised its full-year operating profit forecast to 780 billion yen (about $4.94 billion) from 650 billion yen, a 20% increase.
- U.S. hybrid sales rose 9% in the second quarter and accounted for half of Honda’s global retail sales, reinforcing the company’s shift toward hybrids.
- Honda cut its full-year global vehicle sales forecast 7% to 3.16 million vehicles as weakness in China and tougher North American conditions weighed on its outlook.
On Nov. 10, Honda announced that it raised its full-year operating profit forecast to 780 billion yen (about $4.94 billion) from 650 billion yen (~$4.11 billion), driven by strong U.S. hybrid demand and a weaker yen that helped offset slumping sales in China, even as the automaker booked another $3 billion in charges to restructure its EV business.
The 484.8 billion yen in EV restructuring costs Honda booked in the latest quarter pushed its operating profit down 39% to 118 billion yen (~$747 million) in the July-September quarter, well below the 250 billion yen median forecast in an LSEG poll of nine analysts.
The automaker kept its estimate for EV restructuring costs this financial year at 520 billion yen (~$3.29 billion), including the 484.8 billion yen booked in the latest quarter. Chief Financial Officer Masao Kawaguchi said Honda has made progress in talks with suppliers over settling the costs and aims to resolve them within the current financial year. The latest charge brings total EV restructuring costs to more than $12 billion, up from more than $9 billion in the previous financial year, making it one of the largest restructuring expenses reported by a legacy automaker.
Growing importance of U.S. hybrid market
Honda is increasingly focused on hybrid vehicles in the U.S., where overall vehicle sales rose 9% in the second quarter and accounted for half of its 823,000 global retail sales. To support that focus, the automaker announced on Nov. 9 that it will build a $3 billion assembly plant in central Ohio with capacity for 240,000 vehicles a year, and production is expected to begin in 2029 pending final government approvals.
Moreover, Honda cut its full-year global vehicle sales forecast by 7% to 3.16 million, primarily due to declining sales in China. The automaker also expects slightly tougher conditions in North America in the second half, partly because of higher interest rates and incentives. Together, Honda’s results and Toyota’s improved outlook highlight the increasing significance of the U.S. market for Japanese automakers as hybrid demand rises while EV interest wanes. Toyota raised its profit forecast last week on strong hybrid sales, while Volkswagen and Hyundai posted weaker results.
