Honda Profit Outlook Slashed: China’s EV Rivals Are The Real Threat, Not Tariffs

Honda recently lowered its full-year profit forecast. The company cut its outlook by one-fifth. This drop comes from one-time EV costs and chip shortages. Specifically, a component shortage involving Dutch-based Nexperia hurt production. U.S. tariffs also impacted Honda’s financial results.

However, a much bigger problem is emerging for the Japanese automaker. Chinese electric vehicle (EV) companies are posing a serious long-term threat. These rivals are quickly gaining market share in Southeast Asia. This region was historically dominated by Japanese brands.

The competitive landscape is now very intense in markets like Thailand. Honda’s Executive Vice President Noriya Kaihara confirmed this. He noted the company has lost its edge in pricing. Automakers are increasing incentives and cutting prices to attract buyers. This intense competition means profits are shrinking on new vehicle sales.

In response, Honda expects lower sales in Asia this year. Its vehicle sales projection for Asia, including China, has been cut significantly. Honda now plans to sell 925,000 vehicles in Asia. This is a decline of over 10% from its earlier goal of 1.09 million cars. Honda knows it needs a fundamental review of its Asia strategy. The challenge from Chinese EV makers is forcing Japan’s automakers to adapt quickly.