Honda’s Profits Slide From Poor Car Sales in China

Honda reported a 20% drop in profit for the first half of its fiscal year, mainly due to a slowdown in car sales, especially in China. For the period from April to September, Honda’s profits were €2.9 billion, down from €3.7 billion in the previous year, despite a rise in total sales to €64.7 billion from 9.6 trillion yen.

While Honda saw a boost in global motorcycle sales due to strong demand in Asia, the company’s automotive division struggled in China, where competition and market shifts continue to weigh heavily.

There were more pressures on profits, such as increased warranty and quality-related expenses, as well as higher sales incentives. Foreign exchange fluctuations further added to the downturn. In response to these challenges, Honda adjusted its profit forecast for the full fiscal year through March, lowering expectations by €303 million to €5.7 billion, compared to the previous fiscal year’s €6.6 billion.

What Does This Mean for Me?

The effects of the profit slide extended to Honda’s stock, which dropped 6.5%, while domestic rival Toyota, which also faced profit pressures, saw a 1.7% rise in its shares. As Honda deals with headwinds and trade challenges in one of its most important markets, the company is facing up to growing pressure to strengthen its performance in China and catch up with changing consumer preferences in the automotive space.