Honda registers losses for the first time in 70 years

Honda is suffering the worst crisis in its history, after the automotive division registered losses exceeding 4.2 billion euros during the Japanese fiscal year, which ends on March 31st each year. This is the first time in the Japanese brand's 70-year history that a fiscal year has closed with financial losses, causing a real earthquake that has shaken the foundations of the Nipponese brand. In fact, one of the first measures taken by the company's management has been to rethink the brand's industrial roadmap, oriented towards a total electrification of its range.The poor results of a historically profitable and sound brand like Honda's automotive division (which includes the high-performance subsidiary Acura) are mainly due to the involution of the North American market because of the trade tariffs imposed by the Trump administration and the transition process towards electric cars, which is not progressing at the pace foreseen by the brand.Let's take it step by step, though. To grasp the magnitude of the tragedy, one must first understand that Honda is a brand with a large commercial presence in the United States, a country where it also has several production plants such as those in the state of Ohio, where the Honda CR-V is manufactured, or the factories in Lincoln and Greenwood, in the states of Indiana and Alabama respectively, where Honda Civics and various Acura models for the North American market are produced. However, since 2010 Honda has also opened new plants in Mexico and Canada, taking advantage of the free trade agreements between the countries of North America, where the HR-V, the brand's best-selling car worldwide, is manufactured. The new trade tariffs approved by the Trump administration have made models manufactured in Canada or Mexico no longer competitive in the North American market, with a consequent drop in sales. As Honda manufactures some of its best-selling models in Mexico or Canada, its product has become exponentially more expensive due to trade tariffs, causing the price of cars to become uncompetitive in the United States market. To try to compensate for the increase in the final price of its product, Honda has had to cut the commercial margin for each unit sold of the Honda and Acura divisions, and if to this factor we add that sales have not grown in volume, the reason for the brand's crisis is perfectly understood. And it is that during the year 2025 Honda sold a total of 3,312,000 cars, 10% less than the previous year. Fewer cars sold, and with a smaller margin: the key to the brand's financial storms.A rather uninspiring electricity demand

The second factor that has contributed to Honda's poor economic result has been the low demand for electric vehicles worldwide and the sizing and investments that the brand had made since the launch of the Honda e, a magnificent electric car that we were able to test six years ago and that was supposed to be the spearhead of the Japanese brand's electric strategy. In reality, however, the Honda e and the rest of the brand's electric models have turned out to be a great commercial failure for the Japanese brand.

And it is that Honda had announced a new range of electric cars called Series 0 that were to lead a new futuristic coupe SUV and a sports sedan called Saloon that the brand already had ready to start marketing this 2026, but which has finally been canceled. A large part of Honda's economic shortfall this year is explained by the investments made in two aspirational and performance electric cars that Honda will not manufacture.The magnitude of the tragedy is even greater if we take into account that Honda prioritized the development of new electric cars instead of updating and improving the current CR-V, HR-V or Civic, leaving these combustion models somewhat outdated and unupdated compared to the competition's new combustion, conventional hybrid or plug-in hybrid models.At this point, it is worth remembering that Honda cannot, nor does it want to, compete in price with the new emerging Chinese brands such as BYD or Geely, among others, and that unlike Toyota or Nissan, it does not have a strong commercial network on five continents. For example, the Toyota Yaris Cross or Nissan Juke are urban crossovers designed for the European market, a market segment that Honda has never explored. At this point, it is worth remembering that Honda is a strong brand in Japan, Australia, the United States and Canada, but with little commercial presence in the European market.Goodbye to collaboration with Sony

Another of the consequences of Honda's bad year has been the definitive farewell to the Afeela brand project, a joint venture or collaboration between Honda and Sony to manufacture electric vehicles that leveraged Honda's platforms with technology and infotainment systems developed by Sony. This cancellation has been entirely sudden, to the point that Afeela had already opened a dealership and hired and trained salespeople just a week before the project cancellation announcement. Honda and Sony assure that all customers will receive the payments made as a vehicle reservation, in a move that cannot overshadow the mismanagement of this business project.