Company Reports

Honda's reputation for quality drives demand for its vehicles. Its products and strong financial position should keep it on solid ground, and the company's longtime niche in fuel efficiency has positioned it well to capitalize on consumers seeking fuel-efficient cars. However, the competition is fierce, and the US market's increased move to light trucks, where Honda's lineup is not as complete as its competitors', may be permanent. Over 2003-09, the US car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars lost share to 17% in 2025. In 2025, cars made up approximately 28% of Honda's US sales, compared with 24% for Toyota, 5% for GM, and 2% for Ford. Honda’s car focus gives it an advantage whenever the critical US market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have a product in these segments.

Honda’s fiscal first-quarter consolidated revenue grew 14% year on year, with automobile revenue up 10% and motorcycles up 20%. Automobile margin returned to a positive 5% due to reduced tariffs and favorable currency effects, while sales and profitability for the China unit remained sluggish.

Honda's reputation for quality drives demand for its vehicles. Its products and strong financial position should keep it on solid ground, and the company's longtime niche in fuel efficiency has positioned it well to capitalize on consumers seeking fuel-efficient cars. However, the competition is fierce, and the US market's increased move to light trucks, where Honda's lineup is not as complete as its competitors', may be permanent. Over 2003-09, the US car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars lost share to 17% in 2025. In 2025, cars made up approximately 28% of Honda's US sales, compared with 24% for Toyota, 5% for GM, and 2% for Ford. Honda’s car focus gives it an advantage whenever the critical US market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have a product in these segments.

Honda’s fiscal 2026 fourth quarter consolidated revenue grew 9% year on year, with automobile revenue up 5% and motorcycle revenue up 18%. Automobile margin stayed negative due to tariffs and EV-related provision charges. Management guides fiscal 2027 operating profit to rebound.

Honda's reputation for quality drives demand for its vehicles. Its products and strong financial position should keep it on solid ground, and the company's longtime niche in fuel efficiency has positioned it well to capitalize on consumers seeking fuel-efficient cars. However, the competition is fierce, and the US market's increased move to light trucks, where Honda's lineup is not as complete as its competitors', may be permanent. Over 2003-09, the US car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars lost share to 17% in 2025. In 2025, cars made up approximately 28% of Honda's US sales, compared with 24% for Toyota, 5% for GM, and 2% for Ford. Honda’s car focus gives it an advantage whenever the critical US market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have a product in these segments.

Honda's reputation for quality drives demand for its vehicles. Its products and strong financial position should keep it on solid ground, and the company's longtime niche in fuel efficiency historically positioned it well to take advantage of consumers seeking fuel-efficient cars. However, the competition is fierce, and the US market's increased move to light trucks, where Honda's lineup is not as complete as its competitors', may be permanent. Over 2003-09, the US car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars have lost share to 19% in 2024. In 2024, cars made up 31% of Honda's US sales, compared with 30% for Toyota, 7% for GM, and 2% for Ford. Honda’s car focus gives it an advantage whenever the critical US market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have a product in these segments.

Honda’s reassessment of its electrification strategy and the consequent drastic retreat from the North America and China electric vehicle markets led to downward revisions to operating profit guidance. However, despite the estimated loss for fiscal 2026, Honda maintains its dividend forecast.

Honda's third-quarter fiscal 2025 consolidated revenue declined 3% year on year, with auto segment revenue down 9% and motorcycles up 13%. Auto segment operating margin stayed in negative territory due to tariffs and provisions, while sales and profit for its China operations remained sluggish.

Honda's reputation for quality drives demand for its vehicles. Its products and strong financial position should keep it on solid ground, and the company's longtime niche in fuel efficiency historically positioned it well to take advantage of consumers seeking fuel-efficient cars. However, the competition is fierce, and the US market's increased move to light trucks, where Honda's lineup is not as complete as its competitors', may be permanent. Over 2003-09, the US car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars have lost share to 19% in 2024. In 2024, cars made up 31% of Honda's US sales, compared with 30% for Toyota, 7% for GM, and 2% for Ford. Honda’s car focus gives it an advantage whenever the critical US market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have a product in these segments.

Honda’s fiscal second-quarter consolidated revenue fell 2% year on year, with automobile revenue down 5% and motorcycle revenue up 11%. Automobile operating margin stayed in negative territory due to tariffs and provisions, while sales and profitability for the China unit remained sluggish.

Honda's reputation for quality drives demand for its vehicles. Its products and strong financial position should keep it on solid ground, and the company's longtime niche in fuel efficiency historically positioned it well to take advantage of consumers seeking fuel-efficient cars. However, the competition is fierce, and the US market's increased move to light trucks, where Honda's lineup is not as complete as competitors', may be permanent. Over 2003-09, the US car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars have lost share to 19% in 2024. In 2024, cars made up 31% of Honda's US sales, compared with 30% for Toyota, 7% for GM, and 2% for Ford. Honda’s car focus gives it an advantage whenever the critical US market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have product in these segments.

Honda’s fiscal first-quarter consolidated revenue declined 1% year over year. Revenue for automobile and motorcycle segments grew 1%, while sales and profitability for the China unit remain sluggish. Automobile operating margin declined to negative territory due to tariffs and one-off provisions.

Honda's reputation for quality drives demand for its vehicles. Its products and strong financial position should keep it on solid ground, and the company's longtime niche in fuel efficiency historically positioned it well to take advantage of consumers seeking fuel-efficient cars. However, the competition is fierce, and the US market's increased move to light trucks, where Honda's lineup is not as complete as competitors', may be permanent. Over 2003-09, the US car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars have lost share to 19% in 2024. In 2024, cars made up 31% of Honda's US sales, compared with 30% for Toyota, 7% for GM, and 2% for Ford. Honda’s car focus gives it an advantage whenever the critical US market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have product in these segments.

US President Donald Trump announced that a Japan tariff deal has been reached, setting reciprocal tariffs at 15%. Japanese media is reporting that Japanese automakers will see their 25% tariff reduced to 15%. As of midday, the Nikkei 225 is up 2.8%, with Toyota shares bouncing over 13%.

Honda’s fiscal fourth-quarter revenue declined 1% year over year, with automobile revenue down 3% and the motorcycle segment up 7%. The automobile segment made an operating loss, while the China unit remains sluggish in sales and profitability.

Honda's reputation for quality drives demand for its vehicles. Its products and strong financial position should keep it on solid ground, and the company's longtime niche in fuel efficiency historically positioned it well to take advantage of consumers seeking fuel-efficient cars. However, the competition is fierce, and the US market's increased move to light trucks, where Honda's lineup is not as complete as competitors', may be permanent. Over 2003-09, the US car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars have lost share to 20% in 2023. In 2023, cars made up 34% of Honda's US sales, compared with 29% for Toyota, 11% for GM, and 2% for Ford. Honda’s car focus gives it an advantage whenever the critical US market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have product in these segments.

Shares of Japanese automakers under our coverage were under pressure, slipping 2%-3% on March 27, 2025, as US President Donald Trump signed a proclamation implementing a 25% tariff on US auto imports, all passenger cars, and light trucks not made in the US, effective on April 2.

Honda’s fiscal third-quarter operating income grew 5% year over year as strong hybrid demand in the US and motorcycle sales eased the rise of incentives and expenses. The China unit remained sluggish in sales and profitability. Full-year operating profit guidance of JPY 1.42 trillion was retained.

Honda and Nissan announced to finalize a business integration by June 2025 and set up a holding company through share transfer. Shares of the holding company will be listed in August 2026 while Honda and Nissan would delist. The integration will also include Nissan’s 24%-owned Mitsubishi Motors.

Honda’s fiscal 2025 second-quarter operating income declined 15% year over year as rising incentives and expenses offset strong pricing. China unit remains sluggish in sales and profitability. With this note, we transfer coverage of Honda to Vincent Sun.