On June 1, 2026, Chinese media Tencent News reported that Honda has fallen into its first full-year deficit since its listing due to miscalculations in its electrification strategy and a drastic decline in its market share in China, symbolizing a structural crisis encompassing the entire Japanese automotive industry.

The article introduced that in Honda's consolidated financial results for the fiscal year ending March 2026, announced in May, the net loss was 423.9 billion yen, marking its first full-year deficit since its listing in 1957. It reported that President Toshihiro Mibe said, "We are standing on the brink of whether we can survive."

Furthermore, it pointed out that at the core of Honda's deficit was a miscalculation in its electrification strategy, and although it had been pushing a plan to invest 10 trillion yen to end gasoline car sales by 2040, a sudden halt in strategy led to impairment losses of 2.5 trillion yen. It was reported that President Mibe visited China's supply chain in April and said, "There is no prospect of us winning against such a formidable opponent," admitting to having underestimated the complete ecosystem of China's new energy industry.

The article mentioned that the management crisis is not limited to Honda alone but is spreading across the entire Japanese automotive industry. In addition to Nissan recording a massive deficit of 533.1 billion yen, it reported that the net profit outlook for the seven major domestic companies is expected to be almost halved from fiscal year 2023, which saw record high profits for the industry.

It then introduced that Japanese manufacturers are facing difficulties in the two major markets of China and North America. It pointed out that in the Chinese market, the share of Japanese cars in 2025 has fallen from 23.1% in 2020 to below 10%. Moreover, in the North American market, as a result of the U.S. raising the basic tariff on imported cars from Japan from 2.5% to 15%, operating profits of 1.38 trillion yen for Toyota and 346 billion yen for Honda were lost.

Furthermore, it also analyzed that Japanese car manufacturers are facing structural problems, pointing out that over the past 20 years, they have skewed research and development resources towards hybrids and hydrogen, not allocating them to electric vehicles (EVs), and that the structure where complete vehicle manufacturers and parts manufacturers hold each other's shares acts as a force resisting the transition to electrification.

The article introduced that as a measure to rebuild its management, Honda temporarily froze its global EV expansion plan and indicated a policy to make hybrid vehicles the main pillar of growth for the next three years. It also stated that Nissan has put forward a reconstruction plan centered on personnel reductions and factory closures.

Furthermore, it also touched upon the fact that Honda and Toyota have begun introducing new energy vehicles utilizing platforms and technologies from their local Chinese partners, concluding that China's mature new energy supply chain might become a lifeline for the electrification of Japanese cars in China. (Edited/Translated by Kawajiri)