A sign marks the location of a Honda dealership in Libertyville, Illinois, on Dec. 18, 2024.
Scott Olson | Getty Images
Japanese auto giant Honda‘s first quarter operating profits fell 50% year over year on Wednesday, missing estimates due to U.S. auto tariffs and a stronger yen.
Here are Honda’s results compared with mean estimates from LSEG:
- Revenue: 5.34 trillion yen vs. 5.25 trillion yen
- Operating profit: 244.17 billion yen vs. 323.48 billion yen
However, Japan’s second-biggest carmaker raised its full-year operating profit forecast by 200 billion yen, or 40%, to 700 billion yen compared to its previous forecast of 500 billion yen.
The U.S. accounted for around a quarter of Honda’s exports from Japan in the first half of the year. Its global sales fell 5% over the period, impacted by declines in China, Asia, and Europe.
The earnings come after Japanese automobile makers began cutting prices on vehicle shipments to the U.S. in response to American President Donald Trump’s 25% tariffs on imported vehicles, which came into effect on April 3.
Trump last month announced a new trade deal with Japan that is said to include a lower tariff rate of 15% on Japan-made vehicle imports to the U.S. However, the timeframe for the change to take effect was not clarified.
Japan’s carmakers have been doubling down on price cuts to retain market share. In June, the value of Tokyo’s car exports to the U.S. fell 25.3% year over year, even though car export volumes to the U.S. rose by 4.6% in the same period, according to data from Japan’s trade ministry.
Auto exports to the U.S. are a cornerstone of Japan’s economy, making up 28.3% of all shipments in 2024, according to customs data.
Other Japanese car makers have also been suffering from trade headwinds. On July 30, Japan’s Nissan reported a net loss of 115.8 billion yen for the first quarter, attributing adverse exchange rate movements and the impact of U.S. tariffs.
Toyota, Japan’s second-biggest carmaker, is set to report earnings on Thursday, with economists polled by Reuters expecting that it will post its lowest operating profit in over two years. That comes despite the company reporting that its worldwide sales reached record highs in the first six months of the year.
Japanese Prime Minister Shigeru Ishiba said Monday he would not hesitate to speak with President Donald Trump to ensure the cut to U.S. automobile tariffs is implemented soon.
The country’s chief trade negotiator Ryosei Akazawa left for Washington on Tuesday, seeking to press Trump to sign an executive order that would confirm the exact date for the auto tariffs to be lowered.
