Honda Motor Co., the Japanese automotive giant, has reported a significant drop in profits for the first half of its fiscal year, as tariffs imposed by the United States and ongoing supply chain challenges weigh heavily on its operations.

For the period from April to September 2025, Honda posted a net profit of 311.8 billion yen ($2 billion), a 37 percent decline from 494.6 billion yen ($3.2 billion) during the same period last year. Overall sales totaled 10.6 trillion yen ($69 billion), down 1.5 percent from 10.8 trillion yen ($70.5 billion).

Impact of US Tariffs and Currency Fluctuations

Honda attributed a major portion of the profit decline to Trump-era tariffs on imported vehicles and automotive parts, which reduced operating profit by 164 billion yen ($1.1 billion) during the six-month period. Additionally, unfavorable currency exchange rates further eroded profits, shaving 116 billion yen ($756 million) off the company’s operating income.

As a result, Honda lowered its full-year profit forecast through March 2026 to 300 billion yen ($2 billion), marking a 64 percent drop from 835.8 billion yen ($5.4 billion) the previous fiscal year. The company had previously projected a 420 billion yen ($2.7 billion) annual profit.

Strong Motorcycle Sales Cushion Losses

Despite the challenges, Honda achieved record motorcycle sales, particularly in Asia, excluding Vietnam. The company sold over 9 million motorcycles in Asia during the first half, up from 8.8 million last year, and 10.7 million motorcycles globally, a record figure. This growth partially offset losses in the automotive division.

Vehicle Sales and Regional Performance

Honda’s global vehicle sales declined to 1.68 million units, down from 1.78 million a year ago. While sales grew in North America, they fell in Japan, the rest of Asia, and Europe. Models such as the Honda Accord sedan and Odyssey minivan experienced weaker demand outside the US market.

Supply Chain Disruptions

Adding to Honda’s challenges, the company faced chip shortages due to geopolitical tensions. In September, the Dutch government seized control of Nexperia, a semiconductor firm owned by Chinese company Wingtech Technology, citing national security concerns. China temporarily blocked chip shipments from Nexperia’s Dongguan plant, although exports have now resumed.

As a result, vehicle production at Honda’s Celaya, Mexico plant has been halted since October 28, while North American production has been adjusted since October 27. Honda has not provided a timeline for restoring normal production levels.

Outlook

Honda’s performance highlights the vulnerability of global automakers to tariffs, currency fluctuations, and supply chain disruptions. While robust motorcycle sales provide some stability, the automotive division faces ongoing challenges in maintaining profitability amidst global economic uncertainty and regulatory pressures.