Shaken by historic loss, manufacturer cuts top salaries and reformulates global strategy to avoid direct confrontation with Chinese rivals
Honda announced a drastic revision to its financial projections, predicting the first annual loss since it went public on the Tokyo stock exchange in 1957. The Japanese automaker, which initially estimated a profit, now projects a net loss of $3.6 billion for the fiscal year ending March 2026. The negative result is a reflection of an adverse global scenario for electric vehicles and a protectionist shift in the United States.
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The total impact on the company’s balance sheet amounts to US$ 15.7 billion in write-downs. The amount mainly refers to the cancellation of three new electric SUVs that would be produced on American soil and the restructuring of its supply chain. According to the company’s board, the decision was precipitated by the reduction of government incentives in the US and the aggressive pricing policy of Chinese manufacturers, led by BYD.
As an austerity measure, CEO Toshihiro Mibe and other senior members announced a voluntary 30% cut in their compensation for the next six months. Honda’s setback is not an isolated case: the traditional automotive sector is going through a period of “reality adjustment” in relation to electrification, with billionaire losses also recorded by competitors such as Ford and Stellantis.
To mitigate the loss, Honda is preparing a geographic redirection of its investments, electing India as a new strategic hub. The Indian market is seen as a “safe haven” due to the trade restrictions imposed by the local government on Chinese manufacturers. By strengthening its product line in the region, Honda hopes to regain profit margins without the direct pressure from low-cost competition that has derailed its plans in North America.
