Dive Brief:
- Honda Motor Co. reported a massive revenue surge in the first quarter of FY2027, with its operating profit reaching 530.7 billion yen ($3.36 billion), a year-over-year increase of 117% and the highest-ever revenue in a single quarter, the company said in its earnings report on Wednesday.
- Sales revenue also increased 13.5% YoY to 6 trillion yen ($38.46 billion) on sales of 708,000 vehicles in Q1, a YoY increase of 23,000 units. Vehicle sales in North America rose 4% to 461,000 units in Q1, which also contributed to the revenue jump.
- Although it's a significant recovery from last year, Honda is sticking with its previous guidance that targets sales of 1.7 million vehicles in North America and 2.82 million globally, with revenue of just over 24 trillion yen, which is 11% higher than its previous forecast. The automaker noted, however, that uncertainty surrounding the situation in the Middle East conflicts makes it “necessary to carefully assess risks related to sales volume, material costs and other factors” that could impact its financial forecast.
Dive Insight:
Honda also reported an operating margin of 8.8% in Q1, up from 4.6% last year, as it recovers from EV losses that impacted financial performance over the past year. The company also revised its operating profit forecast upward by 150 billion yen to 650 billion yen, targeting a margin of 2.7%, up from 2.2% previously.
The automaker noted that zero EV-related losses were incurred in Q1 after a 122 billion-yen loss in the same period a year ago.
Honda took a $1.7 billion EV write-off from April to December of 2025 due to market challenges and declining sales industrywide. In March, Honda confirmed the cancellation of three EVs that had been announced for the U.S. market. The automaker also canceled the launch of the Afeela 1 sedan and a second EV model planned for its Sony Honda Mobility joint venture.
Although Honda incurred no EV-related losses in the quarter, its revised forecast calls for a 500 million-yen loss for the fiscal year ending March 31, 2027 as a result of its updated electrification strategy that includes a pivot to hybrid vehicles. American Honda reported record-high hybrid sales in the U.S. last month, topping 36,000 vehicles. In total, sales in July reached 136,549 vehicles, a YoY increase of 12.8%, making it Honda’s best July sales month since 2019.
However, one challenge remaining for Honda as well as other global automakers is declining sales in the China market. The company reported that its vehicle sales in Asia fell 37% YoY in Q1 to 127,000 units, dragging down Honda’s overall global vehicle sales in the quarter.
Consolidated vehicle sales in Q1 were down 6.3% to 786,000 units compared to 839,000 in the same period a year ago, which Honda said was primarily due to sales declines in the Asia market, particularly in China.
