Shares rise even after company reports operating losses
Aerial view shows the Honda of San Marcos dealership on March 12, 2026 in San Marcos, Texas.
Brandon Bell | Getty Images
shares honda engine It rose more than 7% on Friday even as the Japanese automaker posted its first annual operating loss in nearly 70 years.
Honda recorded an operating loss of 414.3 billion yen ($2.61 billion) in the fiscal year that ended in March, compared with an operating profit of 1.2 trillion yen the year before. Provisions for its struggling electric vehicle business and related investments, competition from Chinese rivals and the impact of a 346.9 billion yen U.S. tariff have weighed on its earnings.
“The business environment surrounding the company is changing rapidly and the outlook remains uncertain,” Honda said in its earnings release on Thursday. he said.
The automaker said it would cancel the launch and development of some EV models originally planned for production in North America as part of its efforts to realign its EV business. The Japanese automaker said it expects the restructuring of its EV business to cost more than $9 billion.
Honda also noted that new EV manufacturers are intensifying competition in China. “In such a challenging and competitive environment, the Company has also revised its product launch plans for certain EV models,” Honda added.
The automaker, a late entrant into the EV market, faces challenges from increased competition from Chinese rivals, inflation and U.S. tariffs.
Aya Adachi, assistant researcher at the Center for Geopolitics, Geoeconomics and Technology at the German Council on Foreign Relations, noted: global automotive competition It is increasingly influenced by China’s rapid growth in electric vehicle production.
“Japan’s slow transition to battery electric vehicles while pioneering hybrid technology has left it with a limited presence in China’s new energy vehicle market and exposed it to increasing pressure in export markets,” Adachi said. he said.
Moreover, engine problems and vehicle recalls also damaged Honda’s reputation. Honda engines used by Aston Martin in March found It allegedly caused battery failures, and the Japanese automaker faced a lawsuit in Canada in January. mistake Three Honda models have a 1.5L turbocharged engine.
However, both Citi And nomura They maintained their buy rating on Honda, expecting to see some future growth in the company.
“While we expect earnings to be lower in 3/27, we think now is the right time to price in a full-fledged recovery through 3/28 as the company announced revisions to its strategy,” Nomura analyst Toshihide Kinoshita said in a note, referring to the company’s estimated earnings for the years ending March 2027 and March 2028. he said.
The Japanese automaker is shifting its focus from “the traditional global standard model” to the Chinese and Indian markets, Citi analyst Arifumi Yoshida said in a note. Yoshida said Honda plans to use its advantage in the motorcycle business to capture demand from India’s low-cost segment.
Shares were last traded at 1,418 yen, up 7.42%.
