Honda Motor Co. has reported a substantial decline in its fiscal year profits, citing increased U.S. tariffs and a slowdown in China’s automotive market as primary factors. The Japanese automaker’s net profit fell by 24.5% to ¥835.8 billion ($6.2 billion) for the fiscal year ending March 31, 2025, down from ¥1.1 trillion the previous year.

The company’s operating profit also saw a decrease of 12.2%, totaling ¥1.21 trillion, which was below analysts’ expectations. Revenue, however, increased by 6.2% to ¥21.7 trillion, indicating strong performance in other segments.

Looking ahead, Honda forecasts a 70.1% drop in net profit for the fiscal year ending March 2026, projecting earnings of ¥250 billion. This anticipated decline is attributed to the ongoing impact of U.S. tariffs and a challenging sales environment in China.

In response to these challenges, Honda plans to implement several strategic measures, including adjusting production schedules and postponing an $11 billion investment in electric vehicle and battery factories in Canada. The company aims to mitigate tariff impacts by shifting production to regions less affected by trade tensions.

Despite the downturn in the automotive sector, Honda’s motorcycle division achieved record-high sales volume and operating profit, providing a silver lining in the company’s overall performance.

Honda’s leadership remains cautiously optimistic, emphasizing the need for adaptability in the face of global economic uncertainties. The company continues to explore opportunities to strengthen its presence in emerging markets and invest in sustainable technologies to drive future growth.