Notice Regarding Occurrence of Losses Due to Review of Four-Wheel Electrification Strategy and Revision of Full-Year Consolidated Earnings Guidance

Background of Review of Four-Wheel Electrification Strategy and Occurrence of Losses

Honda Motor Co., Ltd. has been promoting electrification towards achieving carbon neutrality by 2050; however, due to a slowdown in the North American EV market, changes in US tariff policies, and intensified competition in Asia, the profitability of the four-wheel business has deteriorated. In response, the planned launch and development of certain EV models previously scheduled for production in North America have been cancelled. This will result in the recognition of losses from disposals and impairments of related tangible and intangible fixed assets, as well as additional expenses. Furthermore, impairment losses are expected on equity-method investments in China. Together, these factors are projected to cause operating expense losses of between 820 billion yen and 1.12 trillion yen, and investment losses of 110 billion yen to 150 billion yen in the consolidated earnings for the fiscal year ending March 2026.

Revision of Earnings Guidance and Future Business Policy

In light of these losses, the full-year consolidated earnings guidance for the fiscal year ending March 2026 has been significantly downgraded. While revenue is maintained at 21.1 trillion yen with no change from the previous forecast, operating income is expected to be a loss ranging from 570 billion yen to 270 billion yen, with net income potentially showing a maximum loss of 690 billion yen. Going forward, with a reduction in the EV lineup, Honda will strengthen hybrid electric vehicle (HEV) models to enhance competitiveness in Japan, the United States, India, and Asia. Stable shareholder returns will continue, supported by earnings from the motorcycle and financial services businesses. Additionally, voluntary executive salary reductions have been decided.