Japan's second-largest automaker Honda announced it could record losses of up to 690 billion yen (approximately 6.4 trillion won) in fiscal year 2025 as it reviews its electric vehicle strategy.
According to Kyodo News and Nikkei on the 12th (local time), Honda revised its net income forecast for fiscal year 2025 (April 2025 to March 2026) from a profit of 300 billion yen (approximately 2.8 trillion won) to a loss of up to 690 billion yen (approximately 446.7 billion won).
This figure is 990 billion yen (approximately 9.2 trillion won) lower than the previous forecast. If this projection materializes, Honda will record its first annual loss as a publicly traded company since its founding in 1948.
Starting from this fiscal year, Honda anticipates cumulative losses could reach up to 2.5 trillion yen (approximately 23.2 trillion won) going forward.
The primary factor behind Honda's massive losses is its revised EV strategy. Honda had originally set a goal to sell only electric vehicles and fuel cell vehicles globally starting in 2040.
However, Honda President Toshihiro Mibe candidly stated during an online press conference that day, "I think it will be realistically difficult to achieve." Accordingly, Honda has decided to halt development of three EV models that were planned for production in North America. The company is stepping back from its EV-centric strategy and will focus on expanding hybrid vehicle sales.
Taking responsibility for the deteriorating performance, Honda executives have decided to return a portion of their salaries. The Representative Executive Officer President and Representative Executive Officer Vice Presidents, including President Mibe, will return 30% of their monthly salaries for three months during fiscal year ending March 2027.
Cases of executives returning wages due to poor performance can also be found among Korean companies. Hyundai Engineering & Construction and Hyundai Engineering voluntarily returned 20% of executive wages in 2024 amid the construction industry downturn. Posco E&C also reduced salaries of executives at senior vice president level and above by more than 10%. Korea Broadcast Advertising Corporation (KOBACO) executives also returned their entire wage increases considering the company's loss-making situation.