Honda has suffered its first annual loss in 70 years after a disastrous year in which profits collapsed by 96% to just £160 million, down from £4.1 billion the previous year.
The Japanese automotive giant, which has dominated global markets since the 1950s, revealed the staggering decline on Tuesday, attributing the collapse to tepid demand for its electric vehicles and unsustainable investment costs in EV technology. It marks the first loss since 1955, when the company was still recovering from post-war austerity.
📋 By The Numbers
- 96% — Profit decline from £4.1bn to £160m
- 2023 — Previous year profit of £4.1bn
- 1955 — Last annual loss recorded
Honda’s CEO, Toshihiro Mibe, admitted the company’s aggressive pivot to electric vehicles had backfired, with consumers rejecting models like the Honda e and Prologue in favor of cheaper hybrids and internal combustion engines. “We accelerated our EV strategy ahead of market readiness,” Mibe told reporters in Tokyo. “The timing was too soon.”
| Revenue Source | 2023 | 2024 |
|---|---|---|
| Automotive | ¥15.2 trillion | ¥14.3 trillion |
| Motorcycle | ¥2.1 trillion | ¥2.0 trillion |
| Financial Services | ¥1.8 trillion | ¥1.6 trillion |
The losses extend beyond EVs. Honda’s motorcycle division, once its cash cow, saw revenue dip 5% as demand softened in key markets like India and Southeast Asia. Financial services, which provides loans to buyers, also contracted by 11%.
The company has now slashed its EV investment forecast by 30% for the next three years, signaling a sharp retreat from its earlier ambitions. Instead, it will prioritize hybrid models and cost-cutting measures, including plant closures in Europe and North America.
Key Points
- ✅ First annual loss since 1955 after £4.1bn profit in 2023
- ⚡ EV demand lagged behind hybrids and ICE vehicles
- 💡 Honda cuts EV investment by 30% over next three years
Analysts say Honda’s misstep reflects a broader struggle among legacy automakers to balance the transition to electric with market realities. “They bet big on EVs when consumers weren’t ready,” said Takashi Sato, an automotive analyst at Mizuho Securities. “Now they’re paying the price.”
The company has also faced stiff competition from Chinese EV makers like BYD, which now outsells Honda globally in battery-electric vehicles. Honda’s market share in China dropped from 8% in 2022 to 6% in 2024.
💡 Pro Tip
Automakers racing to electrify should heed Honda’s lesson: consumer adoption curves are steeper than technology curves. Hybrid bridges are safer than cliff jumps.
Honda has vowed to return to profitability by fiscal 2026 through job cuts, reduced R&D spending, and a renewed focus on hybrids. But the damage to its reputation as an innovator may linger.
- 📊 EVs contributed just 4% to Honda’s total vehicle sales in 2024
- 🔍 Hybrid sales grew 12%, outpacing EV growth by three times
- ⚠️ Closure of Swindon plant in UK confirmed for 2025
The company’s shares fell 6% in Tokyo trading following the announcement, wiping £2.3 billion off its market value in a single session.
