Macquarie Group describes Honda’s latest moves as a wholesale strategic reset of its electric-vehicle program that has prompted a substantial downward revision to the automaker’s forecasts for the current fiscal period.
The brokerage’s analyst James Hong says Honda’s updated guidance amounts to an admission that its previous EV-focused investment plan no longer aligns with market realities. As part of the revision, Honda now expects an operating loss of JPY270–570 billion for fiscal year ending March 2026, replacing an earlier projection of JPY550 billion in operating profit. That swing implies a deterioration in operating profit of between JPY820 billion and JPY1.12 trillion.
Net income guidance was also tightened dramatically: Honda is now forecasting a net loss of JPY420–690 billion, down from an earlier expectation of JPY300 billion in net profit. Macquarie attributes much of the change to the cancellation of Honda’s U.S. electric-vehicle efforts, including the Honda 0 Series and the Acura RSX programs.
Hong quantifies the financial effects as "JPY820bn–1.12tn of additional operating expenses," together with "JPY110–150bn of equity-method losses" arising from write-downs, impairments and program cancellations. Macquarie estimates roughly JPY1.3 trillion of the total JPY2.5 trillion hit will be recorded in the current fiscal year, with the remaining JPY1.2 trillion to be absorbed in FY3/27.
Despite the scale of the adjustment, Honda plans to keep paying its dividend - a move Macquarie says should provide some support for the company’s valuation.
Hong frames the reset as a response to several developments: weakening U.S. EV demand, policy changes that alter the economics for internal-combustion and hybrid powertrains, and rising competitive pressure in China from local EV makers that possess stronger software and advanced driver-assistance system (ADAS) capabilities.
Looking ahead, Macquarie says Honda’s recovery will depend on its ability to execute on hybrid-electric vehicle (HEV) strategy. The brokerage notes that mid-term performance hinges on whether the automaker can rebuild four-wheel profitability through HEV expansion and reduced fixed costs, while concentrating efforts on Japan, the U.S. and India.
Macquarie has maintained a Neutral rating on Honda and describes the company as its "least-preferred name in Japan autos."
Contextual summary
- Honda has revised FY3/26 guidance to an operating loss of JPY270–570 billion, versus a prior JPY550 billion profit forecast.
- Net income guidance was cut to a JPY420–690 billion loss from an expected JPY300 billion profit, driven largely by cancellation of U.S. EV programs including the Honda 0 Series and Acura RSX.
- Macquarie projects a total impact of about JPY2.5 trillion, with JPY1.3 trillion booked in the current fiscal year and JPY1.2 trillion in FY3/27.