3 line summary
The nine-month cumulative operating profit was 591.5 billion yen (-48.1% compared to the same period last year), with the Japan segment falling into an operating deficit. Bearish. Motorcycle sales were strong at +8.4%, but three businesses were holding back - automobiles -4.4% and financial services -3.9%, making the polarization of profits clear. The company maintained its full-year forecast of sales of 21.1 trillion yen and operating profit of 550 billion yen, but it has been revised to a loss after reviewing its EV strategy since March.
[Summary]
Honda Motor Co., Ltd.'s outlook for the third quarter of FY2026 (cumulative April to December 2025) is bearish. Cumulative nine-month sales revenue was 15,975.7 billion yen (-2.2% year-on-year), and operating income was 591.5 billion yen (-48.1% year-on-year). The most notable feature was that the Japan segment's operating income fell into the red at 74.4 billion yen, reflecting the concentration of EV investment costs and worsening profitability of existing models. In North America, operating income remained positive at 240.2 billion yen, but it was significantly down from 473.4 billion yen in the same period last year. Motorcycles continued to be the only company with cumulative sales growth of +8.4%, increasing its presence as a supporter of company-wide profits. After this, on March 12, the full-year earnings forecast was revised to a loss due to the recording of EV-related losses.
Overview
FY2026 Q3 cumulative figures (April-December 2025):
Sales: 15,975.7 billion yen Operating income: 591.5 billion yen Final profit (attributable to parent company): 465.4 billion yen EPS (cumulative): 115.53 yen (previous year: 169.69 yen) YoY: Sales -2.2%, Operating income -48.1%
Financial Highlights (Simple Table)
| Indicators | Contents |
|---|---|
| Sales revenue (9 months cumulative) | 15,975.7 billion yen, -2.2% compared to the same period last year |
| Operating income (9 months cumulative) | 591.5 billion yen, -48.1% from the previous year |
| Profit before tax | 771.8 billion yen, -37.0% |
| Final profit (attributable to parent company) | 465.4 billion yen, -42.2% from the previous year |
| EPS (cumulative) | 115.53 yen (169.69 yen in the same period last year) |
| Full-year forecast (as of Q3) | Sales 21.1 trillion yen, operating income 550 billion yen, EPS 75.05 yen |
| Factor 1 | Japan segment falls into operating deficit (▲74.4 billion yen) |
| Factor 2 | North American operating profit halved to approximately -49% compared to the same period last year |
*Full-year forecasts have been revised to a decline in losses due to EV-related losses on March 12, 2026.
Sales by segment (9 months total)
| Segment | Revenue | Year-on-year comparison |
|---|---|---|
| Motorcycles | 2,933.7 billion yen | +8.4% |
| Four-wheeled vehicles (automobiles) | 10,219.8 billion yen | ▲4.4% |
| Financial services | 2,555.3 billion yen | ▲3.9% |
| Power Products and Others | 266.9 billion yen | ▲3.8% |
Motorcycle sales further accelerated from +6.1% in the first half, reaching +8.4% in cumulative Q3. The momentum in emerging markets was clear, with Asia +6.2% and other regions +23.4%. On the other hand, sales of automobiles were negative or almost flat in all regions, with Asia having a particularly heavy downturn of -9.3%.
Operating profit/loss by region (9 months cumulative)
| Region | Operating income/loss | Year-on-year comparison |
|---|---|---|
| Japan | ▲74.4 billion yen | Falling into the red from +236.6 billion yen in the same period last year |
| North America | 240.2 billion yen | Approx. -49% from 473.4 billion yen in the same period last year |
| Europe | 4.6 billion yen | +13.9 billion yen from the same period last year |
| Asia | 287 billion yen | 334.3 billion yen in the same period last year |
| Others | 158.5 billion yen | Previous year 132.4 billion yen (+19.8%) |
The biggest focus is on Japan's fall into the red. This appears to be the result of a combination of the centralization of EV development costs at the head office and the worsening profitability of existing models in Japan. The sharp decline in sales in North America (-49% compared to the previous year) was also severe, and profits were directly affected by changes in tariffs and EV policy. On the other hand, profits increased in other regions, and there were significant differences between regions.
What happened (most important)
Japan segment falls into the red
Japan operating profit/loss for the nine months was -74.4 billion yen. This is a deterioration in profit and loss of approximately 310 billion yen in one year, compared to +236.6 billion yen in the same period last year. In Honda's case, there is a structure in which development costs and head office costs tend to be concentrated in the Japanese segment, and upfront investment in EV development has significantly lowered profits and losses in Japan. This was compounded by the deterioration in profitability of domestic sales.
North America's sharp decline
North American operating income was 240.2 billion yen, down 233.2 billion yen from 473.4 billion yen in the same period last year. Tightening U.S. tariffs and rapid changes in the EV market have put pressure on the profitability of North America's automotive and financial services businesses. North American four-wheel vehicle sales themselves are not that large at -4.6%, but this shows that the profit margin has fallen significantly.
Good fight on two wheels
Motorcycle sales accelerated by +8.4% for the nine-month cumulative period. Demand in emerging markets is extremely strong, with growth of +6.2% in Asia and +23.4% in other regions. Motorcycle profits are an important pillar supporting the company's operating income of 591.5 billion yen, and without this business, the decline in business performance would have been even greater.
Light and dark of four-wheeled vehicles by region
For four-wheeled vehicles, sales in Asia remain dire at -9.3%, but this is down from -14.2% in the first half, and a trend of improvement can be seen. In North America, the decline was 4.6%, and the impact on sales was not as large as the impact on financial services and profitability. Europe saw a slight positive increase of +5.7%, with regional diversification producing a certain degree of diversification effect.
Full-year forecast unchanged and revised at a later date
As of the Q3 announcement (February 10, 2026), the full-year forecast maintained sales of 21.1 trillion yen and operating profit of 550 billion yen. However, on March 12, 2026, a review of the EV strategy and impairment and cancellation costs for EV-related assets (up to 1.12 trillion yen) were announced, and the full-year forecast was revised to a loss. Although the Q3 numbers themselves showed a significant decline in profit, subsequent developments had an even bigger impact.
Latest materials (3 months)
February 10, 2026: Q3 financial results announcement and organizational restructuring
On the same day as the cumulative Q3 results, the company announced the absorption-type split of its automobile development functions to Honda R&D Co., Ltd. (effective April 1). The company intends to integrate product development and R&D and move to a system that works as one from theme setting to market launch.
Full year forecast as of February 10, 2026
The full-year forecast at the Q3 stage was maintained at sales of 21.1 trillion yen, operating profit of 550 billion yen, EPS of 75.05 yen, and dividend of 70 yen (interim payment of 35 yen).
March 12, 2026: EV strategy review and significant downward revision
About a month after the Q3 announcement, the company announced the cancellation of its EV model for North America and a fundamental review of its EV strategy. As a result, the full-year operating profit forecast has been revised from 550 billion yen to a loss (-270 billion to -570 billion yen). No matter how weak the Q3 results were, the March 12 disclosure had the biggest impact on the stock price and valuation.
Business structure (perspective as of Q3)
Over the past nine months, we have been able to confirm that motorcycles function as a stable foundation for company-wide performance. Although there are hopes that Asia will bottom out in the automobile industry, the Japanese segment fell into the red and the North American market plummeted, resulting in a significant decline in the overall profitability of the business.
Financial services continue to decline from the previous year, mainly in North America, but lease assets are expanding (from 6,301.3 billion yen at the end of December to 5,748.2 billion yen at the end of the previous fiscal year), and asset formation as a future source of income continues.
Quantitative evaluation
| Indicators | Latest (9 months cumulative) | Comparison | Interpretation |
|---|---|---|---|
| EPS (cumulative) | 115.53 yen | 169.69 yen (▲32%) for the same period last year | Continuous decline in profit level |
| Japan operating income/loss | ▲74.4 billion yen | +236.6 billion yen from the same period last year | Falling into the red due to concentration of EV investment costs |
| North American operating income | 240.2 billion yen | 473.4 billion yen (▲49%) for the same period last year | Direct impact from tariffs and changes in the EV market |
| Motorcycle sales growth | +8.4% | Accelerating from Q2+6.1% | Demand in emerging countries continues to be strong |
| Automobile sales in Asia | -9.3% | Improving trend from Q2 cumulative -14.2% | Possibility that the worst has passed |
Implications for stock prices
As of Q3, the company had barely maintained its full-year forecast, but the Japanese segment's fall into the red and the sharp decline in North America were sending negative signals to the market. The disclosure of the review of the EV strategy on March 12th added an additional blow, and the evaluation axis for the full year itself changed completely as a loss year.
Looking back at Q3, there were limited positive factors such as the strength of motorcycles and the recovery trend of Asian automobiles, but overall there was no bottom in sight for profits. After experiencing large-scale EV-related losses, the focus of evaluation has shifted to the speed of earnings recovery after conversion to HEVs.
Scenario analysis
Bullish: 20% If automobiles in Asia continue to improve, motorcycles maintain high growth throughout the year, EV losses reach the lower limit, and the outlook for the next fiscal year is presented, it will be judged that the worst-case period for recording losses has been factored in, and stock prices will likely rebound.
Neutral: 45% If the recovery in motorcycles is strong but the recovery in automobiles is slow, and the EV loss is within the expected range but the outlook for next fiscal year's profit recovery is weak, then the dividend maintenance evaluation will remain flat.
Bearish: 35% If additional EV losses occur, an increase in equity method losses in the Chinese market, and the impact of tariffs prolongs, the period of losses will become longer into next fiscal year, and stock prices will likely test their downside.
Risk (simple table)
| Risk | Contents |
|---|---|
| Additional EV losses | Possibility of losses continuing up to the cumulative maximum of 2.5 trillion yen disclosed in March |
| Deterioration of the Chinese market | Additional equity method losses and further shrinkage of automobile share |
| Japan segment continues to be in the red | Even after reducing EV development costs, it may take time for profitability to recover |
| North American tariffs | Cost worsening depending on trade policy trends |
| Foreign exchange | Swing towards yen appreciation pushes down yen-converted profits |
| SHM issue | Uncertainty about the direction of the Sony joint venture creates a void in next-generation business |
Summary
In the cumulative Q3 of FY2026, the Japan segment fell into the red and the North American segment fell sharply, resulting in cumulative operating profit nearly halving compared to the same period last year. Although the strong performance of motorcycles barely supported the overall profit and loss, the structural profit margin decline in the automobile business became clear.
After this, the company announced on March 12th a review of its EV strategy and the posting of a large-scale loss, which fundamentally changed its full-year results. Although the Q3 numbers show important details, the focus of evaluation has already shifted to the full-year results on May 14th and the profit structure after conversion to HEV. The next point to check is whether the full-year financial results on May 14th will show the final outcome of the EV loss and the initial outlook for the next fiscal year.