Honda forecasts its first annual loss in 49 years, with the loss amount exceeding Nissan.

[PCauto] For a long time, Honda has been a financially very robust automaker. Even as Japanese brands faced criticism for their slow pivot to electrification, Honda has managed to maintain respectable profitability thanks to its strong global supply chain and high-profit motorcycle business.

However, in March 2026, Honda issued a financial warning for fiscal year 2025, indicating that the company now expects an operating loss of between 270 billion and 570 billion JPY (approximately RM 7.8 billion to RM 16.5 billion)—a sharp reversal from its previous forecast of a 550 billion JPY profit (around RM 16 billion).

Even more severe is the net profit metric, where Honda expects a net loss between 420 billion JPY (approximately RM 1.22 billion) and 690 billion JPY (approximately RM 20 billion) .

This marks the first annual loss for Honda since it began disclosing consolidated financial statements in 1977.

Losses from a stalled EV transition

What caused the red ink? Honda's pivot on EVs.

Honda announced that due to the sharply deteriorating environment of the North American electric vehicle market, coupled with uncertainties in U.S. government policies, the company decided to cancel part of the research and development plans for electric vehicle models originally intended to be manufactured and launched in the United States.

This decision has led to massive expenses and losses amounting to as much as 2.5 trillion JPY (approximately RM 72.5 billion).

This astonishing expenditure mainly includes impairment charges for previously invested research and development assets, compensation for suppliers due to contract cancellations, and asset revaluations arising from a decline in investment returns in markets such as China.

In the view of Honda President Mibe Toshihiro, rather than allowing these projects that no longer possess competitiveness to continue "boiling the frog in warm water," it is better to carry out a thorough financial cleanup in the 2025 fiscal year.

Although this will make the financial reports look extremely bad in the short term, the goal is to completely clear old debts after the 2026 fiscal year, creating room for funds and resources for the new 0 Series electric vehicle lineup.

Losses Larger than Nissan's

Previously, Nissan, due to a decline in global sales and excessively high restructuring costs, recorded a net loss of approximately 670 billion JPY (approximately RM 19.4 billion) in the 2024 fiscal year, causing industry upheaval.

However, with Honda forecasting an upper limit of 690 billion JPY (approximately RM 20.0 billion) in net losses, this company, initially considered to be in a more favorable position, has already surpassed Nissan in absolute loss value.

This is not to say that Honda's situation is more serious than Nissan's.

Nissan's losses were caused by a crisis of losing market share, whereas Honda's losses were a result of voluntary relinquishment.

To shoulder this historic operational responsibility, Honda's CEO and Vice President have already announced a voluntary 30% pay cut for three consecutive months during the 2026 fiscal year.

Honda has made it clear that it will cut a total of 3 trillion JPY (approximately RM 87 billion) in EV-related investments, instead placing greater emphasis on the development of hybrid electric vehicles (HEVs).