In the second quarter alone, Honda’s restructuring costs in this area totalled 484.8 billion yen (around $3.07 billion). In the previous financial year, the company wrote off more than $9 billion for these purposes, according to Reuters. As a result, Honda ended the financial year with a loss for the first time in almost 70 years.
The company estimates the total cost of restructuring its electric vehicle business in the current financial year at 520 billion yen ($3.29 billion). Chief Financial Officer Masao Kawaguchi said that Honda had made significant progress in negotiations with suppliers and hoped to resolve as many restructuring-related issues as possible by the end of the financial year.
Hybrids are propping up sales
Whilst the electric vehicle division is incurring multi-billion losses, hybrids are proving to be Honda’s main source of support. They are selling particularly well in the US: in the second quarter, sales of such vehicles rose by 9 per cent. The US market accounted for around half of the company’s global retail sales, totalling 823,000 vehicles.
However, the quarterly results fell short of expectations. Operating profit for July–September fell by 39 per cent compared with the same period last year, to 118 billion yen ($747 million). Analysts had forecast an average of 250 billion yen ($1.58 billion).
Furthermore, Honda has lowered its full-year global sales forecast by 7 per cent to 3.16 million vehicles. The main reason is a decline in sales in China. In the second half of the year, the company also expects more challenging conditions in North America, partly due to rising interest rates and increased expenditure on sales incentives.
A new focus on the US
This focus on hybrids is also reflected in its investment plans. Honda recently announced the construction of a $3 billion car factory in the US state of Ohio. The plant is due to begin operations in 2029 and will be capable of producing up to 240,000 hybrid vehicles annually.
Honda is therefore revising its previous ambitions in the electric vehicle sector whilst simultaneously ramping up production of hybrids, for which demand currently ensures the company a more stable position in the US market.
This story was translated with the assistance of artificial intelligence.The translation was also reviewed by the Logos Press editorial team.
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