Honda doubled profit after abandoning EV plans that caused its first loss

What was changed

Honda booked the first full-year loss in its history — ¥423.9 billion for the fiscal year ended March 2026 — after heavy costs for electric-vehicle plans that, in the company's acknowledgement, didn't measure up to original ambitions, with US policy shifts pulling back EV incentives and tariffs denting profitability. Honda abandoned many of its planned EV models.

The comeback was quick. For April–June 2026 the automaker reported profit of ¥456.9 billion ($2.9 billion), more than double the ¥196.6 billion a year earlier, on sales up 13.5% to ¥6.06 trillion ($38 billion). Motorcycle operations were highly lucrative, with strong sales in Brazil and India, and car sales grew in Japan and the US while struggling in China.

CFO Masao Kawaguchi attributed the healthy quarter partly to a favourable exchange rate — a cheap yen inflating overseas earnings — and said fixing China would take another year or two of building models Chinese buyers actually want. Honda raised its full-year profit forecast to ¥400 billion from ¥260 billion, and shares jumped 3.9% in Tokyo on the results.

Why it worked

The turnaround is quantified end to end: a ¥423.9B loss year into a doubled ¥456.9B profit quarter

It is a live case of a carmaker retreating from EV timetables as incentives vanish, funded by its motorcycle business

The company names its remaining problem market — China — and a realistic one-to-two-year fix rather than a quick claim

What can be applied

When the policy tailwind behind a big bet disappears, the fastest comeback is redeploying the profitable core, not defending the bet.

Aftermath

Honda expected a return to full-year profit with the forecast raised to ¥400 billion; all Japanese automakers faced uncertainty after a 7.1 magnitude Kumamoto earthquake halted some production lines, with the impact still unclear at reporting.