Honda Takes A Huge Financial Blow

Honda, the second-largest automaker in Japan, isn’t doing so hot these days. With its fiscal year wrapped up, fourth quarter numbers don’t look pretty as the reports its operating profit plummeted 76 percent. That, combined with other bad financial news, and Honda downgrading its forecast for the new fiscal year thanks to the uncertain global trade environment, has people concerned.

Hackers take over a Nissan’s steering remotely.

We think Honda is going to be okay, but every automaker is facing a degree of uncertainty with the tariffs and other challenges. The company missed its projected operating profit for Q4, which was 73.5 billion yen instead of the expected 275.5 billion yen.

At least revenue hit the target for Q4. For last fiscal year, revenue was up 6.2 percent year-over-year. In other words, everything is a bit of a mixed bag.

But the outlook for this fiscal year is grim as Honda say it believes operating profit will fall 59 percent, net profit will collapse 70.1 percent, and revenue will dip 6.4 percent.

While Honda says the gloomy outlook is because of the tariffs, we wonder if part of the drops come as the auto industry as a whole is facing the other side of crazy demand and prices during the covid era. In other words, this is the economic principle that what goes up must eventually come down.

Nissan also took it on the kisser for Q4, seeing its operating profit fall a whopping 94 percent. For the fiscal year, the company’s operating profit dropped 88 percent. Also for the fiscal year, Nissan saw a net loss of 676 billion yen, which is about $4.5 billion.

This situation is really putting the squeeze on Nissan. But even Toyota, the largest Japanese automaker, is feeling it, seeing profits contract about 20 percent in Q4. The company is projecting its operating income for the new fiscal year will fall about 1 trillion yen short of what it just achieved.

In other words, everyone is feeling the heat as the economic seas are getting turbulent worldwide. While many are happy to blame all of that on Trump’s tariffs, we think other factors are feeding into the situation as well.

Image via Honda