Honda Motor Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
February 13, 2025
Skip to Participants
Moderator

financial results briefing. Let me first introduce the executives in attendance. Our Director, Executive Vice President and Representative Executive Officer Shinji Aoyama.

Moderator

Aoyama.

Moderator

How did you? The Director, Managing Executive Director and CFO, Eiji Fujimura. Thank you very much. First, Mr. Aoyama will overview the FY 'twenty five third quarter financial results and FY 'twenty five full year consolidated forecast, followed by Mr.

Moderator

Fujimura's explanation on the details. Mr. Aoyama, the floor is yours. And thank you for your continued support for Honda's business activities. Thank you very much.

Moderator

And let me explain the financial results for the FY twenty twenty five third quarter. First, let me highlight the key points. The FY twenty twenty five third quarter cumulative operating profit was 1,139,900,000,000.0 yen with an operating profit margin of 7%. In motorcycle business, sales volume remained strong globally and third quarter cumulative total was 15,500,000 units. In automobile business, consolidated unit sales volume decreased by 297,000 units year on year despite solid sales in North America due to drop in Asia, mainly China.

Moderator

Operating cash flow after R and D adjustment representing funding for future investments remained at the same level year on year at 1,945,000,000,000 yen. The FY twenty five consolidated financial forecast and changed. Operating profit, trillion 420,000,000,000 yen. Profit for the year, 950,000,000,000 yen. Motorcycle unit sales has been revised upward to a record high due to strong global sales.

Moderator

Automobile operations mainly due to decline in Japan is revised downward to 3,750,000 units. However, due to rise in motorcycle sales and exchange rate, operating profit and profit for the year forecast remain unchanged. A resolution was made on 12/23/2024 to repurchase 1,100,000,000,000.0 yen worth of company shares. 184,900,000,000.0 yen has been acquired as of 01/31/2025. We will work to complete repurchase of JPY 1,100,000,000,000.0 in shares.

Moderator

Next, the situation in the major markets. Regarding motorcycle operations, due to strong demand in India and Brazil combined with economic recovery in Vietnam, sales exceeded the same period last year. Automobile business saw an increase in Japan and The United States, but due to the severe market environment in China, total sales dropped year on year. In Japan, sales volume in the third quarter was lower than the same period last year due to fierce competition amongst others. The cumulative consolidated financial results for FY twenty five third quarter is as follows.

Moderator

Operating profit increased by 63,500,000,000.0 yen year on year, totaling 1,000,000,000,139,900,000,000.0 yen. Equity method investment profit decreased by 94,500,000,000.0 yen, a loss of 27,200,000,000.0 yen. Profit for the period attributable to owners of the parent company was 805,200,000,000.0 yen, down 64,300,000,000.0 yen. Consolidated financial forecast for the fiscal year ending March 2025. We maintain our previous forecast for both operating profit at JPY 1,420,000,000,000 and current profit attributable to owner of the parent company JPY $950,000,000,000.

Moderator

Exchange rate assumption is JPY 152 against a dollar for the fourth quarter and full year. The forecast for the annual dividend remains at 68 yen, unchanged from the previous announcement. Additionally, a resolution was made on 12/23/2024, to repurchase 1,100,000,000,000.0 yen worth of company shares. As of 01/31/2025, '1 hundred and '80 '4 point '9 billion yen has been acquired. Cumulative FY 2025 total of acquired shares is $472,000,000,000 yen.

Moderator

Mr. Fujimura will present the details of the financial results.

Moderator

I'll explain the results of the third quarter. Regarding the cumulative unit sales until the third quarter FY March 2025 of the group, for the motorcycle segment, due to the year on year increase mainly in this year, 15,508,000 units sold for Automobile segments due to decrease in Asia, mainly China, Two Million Eight Hundred And Seventeen Thousand units sold. And for Power Products segment, due to decrease mainly in Europe, 2 Million 5 Hundred And 16 Thousand units were sold. Consolidated financial results of the cumulative three quarters were explained already. Next, I will explain factors of ups and downs of profit before income taxes of a cumulative nine months year on year.

Moderator

Operating profit increased by billion year on year because of the following factors. Regarding our sales impact, profit increased due to the rising sales unit. However, incentives went up, thus the profit was squeezed by JPY 104,300,000,000.0. Regarding price cost impact, thanks to the pricing that commensurate the improved product values, profit increased by JPY $376,000,000,000. Regarding expenses due to incremental labor and subcontractor cost, profit squeezed by JPY 54,300,000,000.0.

Moderator

R and D cost increased JPY 97,500,000,000.0 downward impact on profit and the currency effects squeezed the profit by 56,300,000,000.0 yen Profit before income taxes were down by 38,900,000,000 because of the profit of equity method declined due to a drop of the EBITDA sales in China and so on, although operating profit itself increased. Regarding the operating profit by segments, JPY 501,600,000,000.0 for a motorcycle business and JPY 402,600,000,000.0 for automotive and JPY244.9 billion for Financial Service businesses and Power Products and other businesses made losses of JPY9.3 billion. Next are the cash flows. Free cash flows from the businesses excluding Financial Services businesses were JPY 693,700,000,000.0 during the first nine months cumulative of the FY 2025. Net cash at the end of the quarter was trillion.

Moderator

Operating cash flows after R and D adjustment were trillion. Next, I'll explain consolidated business forecast over FY March 2025. Regarding the projection of the group's unit sales versus the previous forecast, unit sales of the motorcycle will be 20,600,000, mainly reflecting the increase in Asia. And units of automobiles will be 3,750,000,000.00, mainly reflecting the decline in Japan. And those of Power Products businesses will stay at 3,660,000.00, same as the last forecast.

Moderator

I've covered the forecast of the consolidated performance of the FY March 2025. Next, let me explain factors behind changes in profit before income taxes year on year basis. Operating profit will be up by JPY 38,000,000,000 year on year. The breakdown of the differences will be regarding the sales impact, although the incremental unit sales will push up the profit. However, the higher incentives and so forth will squeeze the profit by 198,000,000,000.

Moderator

Regarding price cost impact, pricing reflecting a product value improvement and so on will add a profit by JPY $535,000,000,000. Expenses will increase by 73,500,000,000.0, squeezing the profit. And R and D cost will increase by 125,000,000,000, squeezing the profit too. And the currency effect will impact negatively on profit by JPY 105,000,000,000. Although operating profit itself increased, the profit before income taxes will drop by JPY 177,300,000,000.0, reflecting a profit of equity method because of the reduction in unit sales in China.

Moderator

Next, let me explain the differences in comparison to the previous forecast. We will keep the same operating profit of the previous guidance, of which the breakdowns will be. Motorcycle sales will increase. However, the unit of automobiles will reduce. Thus, the sales impact will squeeze the profit by 27,500,000,000.0 yen Price cost will squeeze the profit by 15,000,000,000 yen Expenses will increase by 5,000,000,000 yen reducing the profit and the currency effects will push up the profit by 47,500,000,000.0 yen Profit before impact taxes before income taxes will be expected to be higher by JPY 30,000,000,000, reflecting yen depreciation causing forex gains.

Moderator

Lastly, this is a forecast for capital expenditures, depreciation and R and D spending. And that concludes my presentation. Thank you very much.

Moderator

Thank you for listening. And now we'd like to proceed to Q and A. As we have pre informed, we will be taking questions via Zoom. Currently, we are receiving a number of inquiries regarding our business integration. However, those questions will be addressed when our president holds a news conference at around 04:50PM.

Moderator

So we would like you to refrain from asking questions regarding the business integration and focus solely on the financial results related questions. We ask for your understanding and cooperation. Those of you who have questions, please use the press of the raise hand button. First question? From Toyo Keizai and Mr.

Moderator

Yokohama, please.

Moderator

Okay. And this

Moderator

is Higoyama from Toyokiza. Can you hear me now?

Moderator

Yes. Thank you.

Moderator

I have two questions. First, about the full year, the fourth quarter's plan the third quarter is about operating profit, 410, and you had deduct, the 280,000,000,000 for the fourth quarter. So what is the reason for the decline? And I'm asking the same question. I think it's related to the expenses.

Moderator

But compared to the past plans, please talk about the risk and opportunities. And so that is my question. And I would like to proceed to the next question. But in the interim announcement, you talked about the EV incentives to quite an extent. And I think it was a $100,000,000,000 increase from the original plan.

Moderator

And the third quarter after the third quarter as of February right now, North American incentive, how much increase are you seeing? And are you seeing that the incentive costs are increasing? And I think that the consolidated for automotive is declining. So please explain about the incentives in North America. Thank you, mister Yokema.

Moderator

I think you've asked two questions. But first, about the fourth quarter plan and, well, the third quarter actual compared to the actual third quarter, we are asking about what about the fourth quarter. That was my understanding of the question here. But basically, speaking, that the fourth quarter, well, it's the end of our fiscal year. And so what increases is especially the R and D area and also SGA.

Moderator

And because it's the end of the fiscal year, there are a number of things that are paid out and delivered to us. And so there's an increase in expenditure. Therefore, in the fourth quarter, it tends to be the SG and RNAD. They tend to be, well, roughly speaking, one stage higher. Well, it's $3.90 or a little less than 400,000,000,000 for the third quarter operating profit, but most of that is SGA and R and D.

Moderator

So I think that those are the main ones. What North American incentive related items for slightly, the procurement cost is, in some cases, in other words, the finance business I'm talking about here, the procurement cost is increasing, but that's included. But it's mostly the SGA on R and D that will explain the numbers for the fourth quarter. Now about North America and the intensives in North America. Well, it has increased slightly now, but the procurement cost is slightly higher.

Moderator

And, this is also reflected partially. And in total, I think that is just a marginal increase as a total, that is. And because we're talking about North America on the whole and the incentives of North America on the whole, but EV incentives, if you just focus on EV incentives, in the second quarter, in the first half, I said, there will be for full year an impact of 100,000,000,000 yen. And just talking about that part, I do think that the number has slightly declined. In other words, we were able to reduce the incentives.

Moderator

But because of the sales unit volume and also the production. Well, these are products being produced at GM. And the production, there is adjustment in the supply. And therefore, the final, vis a vis the supply, there, we have tried to reduce the supply and therefore there is the need to make payments or discuss the possibility of making payments for compensation, etcetera. And therefore, in the fourth quarter, these things could turn out to be on the negative side.

Moderator

But right now, we don't have any numbers at hand and therefore, they're not reflected right now. But there are the possibility of such negative factors in the fourth quarter. Is there any additional explanation? Well, yes. About the fourth quarter, well, to begin with, compared to the original plan, I think you were asking what it looks like right now.

Moderator

But for the full year forecast, the exchange rate, we changed it to JPY 152. But we still have $100,000,000,000,420,000,000,000 operating profit. I mean, it has been covered, offset by the motorcycle, but and it has not been fully offset for the automotive. And therefore, for the full year, it in fact, acceptance will be negative. But the third quarter, the motorcycle business did offset the automotive business, and there was the weakening of the yen, and there was about a 30,000,000,000 yen compared to the budget add on to in the third quarter.

Moderator

So the full year negative has more skewed than skewed to the fourth quarter. And that is the difference between the last time and this time. That is all. Thank you. Thank you

Moderator

very much, Mr. Kuema. Next question. Asahi, Simba newspaper. Mr.

Moderator

Nishiyama, please. So thank you for the explanation. And I have two questions. First one, earlier, the question was already covering this point, which is automobile business profitability as compared to motorcycles. In a way, the motorcycle business is very good.

Moderator

That is the factor behind. However, in order to improve the profitability of the automobile businesses, of course, there could be another separate discussion about business integration, so on and forth. But what is your measures for improving profitability of the cards? And then in the last presentation and that time around there was a Trump's administration on topics talked about a lot and then a tariff for Canada and Mexico is to be a reason. Of course, it is a frozen format, but we don't know when it will be coming back again.

Moderator

And what is your measure against that? And once the tariff is in place, what is the impact on your businesses?

Moderator

Thank you

Moderator

very much, Mr. Nishiamam. So profitability of automobile businesses. To start with our recent situation, the revenue for this year, looking at that revenue, of course, that may look a little lower, especially in comparison to that of motorcycle business. However, in order to give you the precise answer, for instance, battery EV development cost and battery EV's sales volume is not so high in North America and in China.

Moderator

However, if battery EV businesses and those investment in the air deducted from that. The remainder will be the Air ICE and Hybrid businesses. And for that part alone, actually, the situation for that part is not so different from the previous term. The profitability is about 8% for that part. Therefore, hybrid and then gasoline based engine cars have profitability that is far improved from the previous situation.

Moderator

That is a kind of overall picture. And battery EVs, we are preparing for the business of battery EVs now. For instance, GM production, that was the starting point for North America. And then right next fiscal year, we are going to produce and launch the cars that we developed by ourselves in North America and U. S.

Moderator

And as of today, I wouldn't say that that will be making a very good business right at the start. However, including the preparation for the next gen cars, we are going to improve the businesses of the upcoming models, and we will spend the development efforts with investment, which will improve the situation furthermore. And then profitability of the broadband businesses from this model year '27 onward, we already explained that in our December, next generation hybrid starting around a model year 'twenty six or 'twenty seven. And the high rate in those years will be of much higher profitability and also our commercial values of those will be much better. And with them in place, it will improve the profitability of the entire businesses, including ICE cars and hybrid.

Moderator

And then Trump administration after the March 1, the question is still a hypothetical, I should say. However, if I want to try to answer your question squarely, thank you for your question, of course. So suppose in March 1, '20 '5 percent tariff is started if that comes in place. So the impact on the business up until March of this year, there could be perhaps a 20,000,000,000 plus impact. That is the assumption as of today.

Moderator

However, it is a super short term impact, right? Production in Mexico, Canada, we have those productions in there, and we will try to bring over those products from those two areas to The U. S. Earlier, perhaps in February, and that is our actions in the short term.

Moderator

And in

Moderator

terms of tariff increase, again, in the big picture, of course, every year, the situation is rather different. However, about one third or higher than one third of the businesses are using the components of product rolled down from Canada and Mexico. The remainder by two quarters, two thirds, produced in The U. S. Therefore, our second highest local content of the production of the vehicles next to Ford in The United States.

Moderator

And the question is, how effective would that policy would become? In fact, it is very difficult to visualize it. So at this moment, what we can do is to do something in the short term, which is about current production based on the current model mix and production in our Mexico Canadian factories. We could reorganize the mix of the production that was there. This is something we can do short term.

Moderator

But in a midterm perspective, we could change the allocation of the model mix in different ways, we are preparing for that too. However, we have possible actions and the consideration for short term, mid term, long term, so forth, but we don't really give a go at this moment for any objections on the table today. So Fujimura san, anything to add, please? So again, the tariff. So what is the approximate estimate of the impact based on the simple calculation, based on the CVU complementary supplies.

Moderator

In The United States, we have their next to fourth sort of local content of the productions, meaning 60 of the products are produced in The U. S. We have some import from Japan as well, but 40% of those are supported from by the production in Mexico and Canada. And of course, those two countries are also dependent on The U. S, too.

Moderator

And at the moment, we are talking about the sales in our U. S, which pertains to the production in Mexico and Canada. And last year, it was about 550,000. And Canada is dependent on The U. S.

Moderator

For 40,000 and Mexico is dependent on 20 thousand as up to 610,000 units. And of course, that depends on the type of models. But suppose cost 30,000 for the cost of those cars and then 25% of the tariff to that amount of the money that where you can calculate impact on the cars plus you can think about others like steels and aluminum, other miscellaneous materials and so forth. But that could be like a full digits or high end of the four digits figures, I suppose, as much as I could expect as an impact. And my colleague, Aguiya Masan, said about our short made long term measures actions and when should we trigger to start those actions.

Moderator

Of course, we have to watch carefully what's going on then. I decide when to start with that. Thank you.

Moderator

Thank you very much, Mr. Nishiyama. And next question, please. Nehaishi from Yomiuri Shimbun newspaper. Thank you.

Moderator

About the motorcycle sales in Thailand, is declining again from the last quarter. I think it's due to market conditions. And what impact does this have on your automobile business? That's my first question. And the second question about repurchasing your shares.

Moderator

What's going to do?

Moderator

Well, as of December, yes, there was the talk of the business integration with Nissan. And based on that, well, now that this has been scrapped, what is the reason for continuing to do the repurchase? Thank you. Mr. Narahashi?

Moderator

Well, about your first question, Well, the impact on automotive business. Right? Yes. Okay. Yes.

Moderator

What is your outlook of the Thai market? And, Okay. I understand. Automotive motorcycle sales in Thailand, this year's numbers compared to to last year, is quite low. That's for sure.

Moderator

Then this apparently is because of the credit, the difficulty in financing. And so that is the cause. That is clear. But about the motorcycle sales in Thailand, just looking at that, towards the end of last year, we

Moderator

Well, we

Moderator

have for the low income bracket, seeing that the income tax was refunded and the Thai motorcycle sales was better, but still it's quite significantly low year on year. Now about automobile, and related to the financing and difficulty to secure loans, I think this is continuing. And therefore, the market, in both in the motorcycle and automobile market in Thailand, it has been on the decline for the past year or so. So given such circumstances, however, as for the motorcycle business, for the Thai market, we have an 80% market share, and therefore, we want to maintain this share and wait for the market to recover, should I say. And as for the automotive business, on a macroscopic level, the loan screening is very tough and it's difficult to secure loans.

Moderator

But in addition to that, for the automotive business, there are the Chinese OEM, which are introducing EVs. And I think that this has had an impact. But for battery EV, 20% within the market, about 20% or so

Moderator

are,

Moderator

in the passenger vehicle segment, EVs, battery EVs. So it's not increasing, but it's rather sluggish in Thailand, the battery EVs. But we also have been making effort to sell BEVs since we want to work harder next fiscal year. About your second question, about the repurchase of our shares and why we're continuing to do so,

Moderator

well,

Moderator

to begin with, on December 23, we announced that we will start consultation for possible business integration. And at the same time, this resolution was made and decided. But, while the talks continue, we try to ensure that this will not comprise any insider trading. And therefore, that is the reason why we had that resolution and made the announcement. But it was just a matter of timing.

Moderator

And, so I'm talking about the size of the repurchase. And this is accumulation of the from the past. We want to optimize our equity ratio. And, therefore, we believe that the timing at which this was resolved was just at the time when we're starting the business integration talks with Nissan. But the size of the repurchase and the schedule of the buybacks, well, it was high time for us to do it.

Moderator

So it was just a matter of timing. But, this was due to the need to optimize, and that was some coming from the past. And, we will continue to buy back, and nothing will change. Mr. Fujimoya?

Moderator

Well, let me add some numbers here. As of the December, net cash, it was 3,800,000,000,000.0 yen And so it's about 2.5 months' worth from the beginning of the month. And due to the Lehman crisis and others, we have experienced from that experience one month worth of cash is something that we want to hold normally. So but against that, it was one point five months worth rather. So it was 1.5 worth rather.

Moderator

And so we want to make appropriate our equity ratio. And so PBR one fold, that was our target. And instead of holding cash at hand, we want to return to our shareholders. And therefore, we have decided for a buyback of 1,100,000,000,000. And as Mr.

Moderator

Ayame has explained, this was not because of the business integration talks with Nissan. This 1,100,000,000,000.0 yen program, once it is completed, we will have a one month level of cash at hand. So we think that this is the appropriate level. Thank you.

Moderator

Thank you. So thank you, Mr. Nelahashi. Next

Moderator

Nelohashi.

Moderator

So motorcycle and automobile businesses going forward, what is the concept or ideas for the operating profit for them? For the time being, EV development and SG and A cost is prioritized and automobile profitability is not growing, maybe it's suppressed a bit. And also with the motorcycle businesses, we have electrification going on. So how much would that grow given we are a good marketplace too? However, overall, if you have a mixture of the two businesses, do you think we can grow them together continually going forward?

Moderator

Or would that be suppressed a bit? Or are there any opportunities to grow too? So that is the question. Thank you, Mr. Logos Chief.

Moderator

To start with the motorcycle businesses, In fact, it is for the automobile too, the progress of battery EVs and the progress towards that. I think the assumption of that speed is one thing that we have to mind about. However, it is kind of difficult to anticipate the speed of that at this moment because of the North America policy situation, and the things are quite unclear now. However, let's start with the motorcycle businesses. Electrification of the air motorcycles is as compared to that of automobiles.

Moderator

We have investment on those for motorcycle, and the amount of the investment is not very big as compared to that of automobiles. With that, we are successfully electrifying motorcycles based on the past technologies of the engines and frames, and we are working on similarly with the battery EVs. We best combine the technologies and so forth. That way, we can have their restricted development cost those successful. And then as we said with our automobiles, the battery EV cost for the cars is quite, a lot, but motorcycle end, it is not that much.

Moderator

And looking at the global motorcycle market today, I think we still have the leeway, the growth potential to in India, Brazil in a short while. We still have markets there, The Philippines, Pakistan, Bangladesh, for instance. We still have lots of market to grow into. In that regard, even with the ICE engine based vehicles, we will be able to maintain high level of the profitability for the motorcycle businesses for quite a while. And for the Automobiles, we covered that a bit in the first question, but we have the air gasoline based engines, including high grades, which have the air 8% profitability today.

Moderator

And with the next generation hybrid comes in, in 2029 or 2027 or '28, excuse me, those profitability will be growing into the two digits above 10%. Therefore, so profitability or business of the air battery EV, what would the air business be like at this situation? And we are going to launch air battery EVs, newly going forward. And of course, we will have improvement as compared to the current situation in The United States. However, as I said, currently, the visibility is quite poor.

Moderator

For instance, RRA income tax deductions of both, we thought about LGES battery plants, so forth, would be utilized with the assumption of $7,500 reduction of the taxes based on that was the original assumption. And now the question is what will become of eventually in this picture. So we can't really say what's going to happen. Therefore, it is very difficult to tell you the business outlook. But nevertheless, we like to maintain the high level of profitability with ICE and current gas gas based vehicles.

Moderator

In the meantime, with the battery based EVs vehicles, we could be more flexible and be more flexible to react to the air and give us circumstances as we go. Thank you very much.

Moderator

Thank you very much, Mr. Nobuchi. Next question,

Moderator

please. From

Moderator

Mr. Mizutori from Japan Automotive Daily, please. We cannot hear you. Can you hear me now? Yes, please.

Moderator

Thank you. The first question about China. So we see that there is a 40% year on year decline from April to December and the EA series, and that was thought to be promising. But there has been a bit longer time required for ensuring the quality. And therefore, locally, the HEB market sees it developing.

Moderator

But how are you trying to make a recovery in China? That's my first question. And about the number, I want to make some confirmation. The full year, the capital expenditure is 70,000,000,000 yen or so less, I think. So is this due to the revisiting of exchange rate?

Moderator

Is there anything that you postponed in terms of your CapEx? About well, Ms. Doi san, first of all, thank you very much for the question. First, about the ES series. Yes, the quality.

Moderator

Well, yes, in the preparation for mass production, I think that we were a month or two behind schedule, that is for sure. But there wasn't any significant problem. So, so, from March to April, we will be launching. So I think that this is a current plan. But the MSRP, the final decision has not been made, MSRP.

Moderator

And the current market, including the incentives, the situation is quite tough and what pricing we should adopt, etcetera. These are things that we're still looking into right now. Well, about the competitiveness, whether there is or is not competitiveness, as we are making announcements locally, but the styling, the appearance, the interior, space, design, have all won a high appraisal. So, we have a high expectation, for our models. But, yes, first, the Air Series.

Moderator

Well, as we have been announcing, the past, the a seven, the a year series a s seven. I will start with that model, and, then the sedan GT, will be launched. And then after, EA seven, this, will will have a three row seat, large SUV launched. So we are preparing this model too. So, this will be this series.

Moderator

And, therefore, with this, we want to establish and expand the year series. That is for the current battery EV plan. Meanwhile, as you know, the net ratio in 2024 calendar year, it was more than 46%. Next year, what will happen? Well, there are different views on this.

Moderator

So but, still, in our case, we are thinking 55% or more. So there will be an increase of new energy vehicles. But, for the premier hybrid, we want to go ahead with that. We want to use the current Accord and CRV and the sister plug in hybrid vehicles. And, well, we have an incentive race right now, which is quite tough, so it's not selling that much.

Moderator

But other than that, we think of that basically. Next fiscal year, no, maybe the year after, as I said, the next generation hybrid will start mass production in China. So it's, FY twenty seven. Yes. FY twenty seven.

Moderator

So at that timing, it will start. And we want to sell these models, but the net ratio is increasing. And therefore, well, if there's a 10% increase, then the non NEV vehicles will decline. The market, the gasoline vehicle market will decline by more than 10. This is something that we cannot deny.

Moderator

So next fiscal year, depending well, looking at our unit sales, well, we have to assume what market changes will take place and put together our business plan. Well, yes. And I think that with the NEV ratio increasing, we want to sell our NEVs. That is the opportunity that we want to capture. About the second CapEx, so, yes, the decline of 70,000,000,000 is not really a delay, but instead, it has been posted slightly.

Moderator

Well, what we are planning for the end of the fiscal year will be, carried over to the next fiscal year, the beginning of next fiscal year. So that's about the change that we are seeing. The specifics, can I disclose the specifics? Well, the battery EV related investment, Canada related, well, there has not really a delay, but we've just changed the timing. Okay.

Moderator

Thank you.

Moderator

Thank you very much, Mr. Mizuturi. Next question from EKACR, Mr. Tatkei, please.

Moderator

Hello. Thank you.

Moderator

Two questions. First one is The U. S. Market automobiles. In The United States, Trump Administration has started and upcoming curve sales.

Moderator

What do you think it how it would be? And well, hybrid demand is good today, but how do you assess the current

Moderator

EV

Moderator

and hybrid sales situation? How would you address current situation? And the other question is Southeast Asian region hybrid and plug in hybrid are well accepted, very popular there, I heard. And do you have a plan to be more engaged in the businesses for them? So please share with us your assessment and how you are going to do about your businesses in there.

Moderator

Thank you very much, Doctor. Hassan, for your question. So Trump's administration started eventually. And then as of now, well, the things keep changing minute by minute, but our stance is to stay flexible and be able to be agile in reacting to the situation. But as of now, Canada and Mexico and its tariff situation, the current interest point is around that.

Moderator

And aluminum and steel tariff about 25% on those would provide us some impact, of course. However, those materials like, aluminum or steels, it is not too difficult to find out our solution because we have quite a bit of procurement within the country in The U. S. A part of the air supplies could be from Canada, from Japan as well for aluminum and steel. However, I don't think it is very difficult to address the situation of the tariff for those two materials.

Moderator

At 25% of this other CBU from Mexico and Canada, if that's a tariff policy continues for a half a year, two, three years, for instance, it will be difficult situation. So our action might be different depending on how we would assess the upcoming situations like that. And as of now, like I said before, dollars 7,500, thanks, how would that be eventually? And also, the state of California is having this ZEV regulation. And how would that be changing under Trump administration reserve and the regulation in California?

Moderator

In fact, from the multi year '26, we are to incorporate reserve requirements. And then under this regulation, we need to sell more battery EVs. However, given the current situation, it is quite difficult to achieve that requirement for the regulation. And I wouldn't say this is perfectly linked with the Trump administration intention. However, the ZEV related regulation will have to change as accordingly, perhaps.

Moderator

But as for the hybrid, as a fact. And in case of Honda, this year, about 400,000 hybrid cars to be sold in this fiscal year ending March 2025. And next year, it will be a little more, maybe a little less than 500,000 units of a hybrid we expect. Therefore, this year, we have 25% of a hybrid cars out of all types. That is our prospect for this year.

Moderator

And next year, 500,000 units in North America for hybrid. Therefore, in a global context, this year, the volume will be a bit less in China, a bit less hybrid over there too. But this year, I would say, 900,000 hybrid cars for this current year. And next year, it will be more than 1,000,000. That's our assessment as of today.

Moderator

And what is the benefit for Honda? I think that was your first question, I suppose. I didn't understand your the intent of your question, really. But about Southeast Asia countries, the demands for hybrid in Thailand and in Indonesia market, the demands for that is mounting. In Thailand, the hybrid ratio is growing, let's say, 30% or so hybrid, I suppose.

Moderator

Indonesia, the competitor is going ahead, and we are a little behind. However, the ratio out of the entire market will be like, of course, with the battery EVs a bit growing, 6% in Indonesia. Hybrid is about 8%. So out of the entire market, they are still a small percentage and the Hondas are a little behind as of now. But next year, we will be more aggressive launching and selling the hybrid cars in Indonesia.

Moderator

Thank you.

Moderator

Thank you. I apologize for the unclear question. But when I talked about benefit, I was saying that we are seeing an increase in demand for HEV, hybrid. And, therefore, I thought that there might be an opportunity for Honda to sell more hybrids. So in that context, well, you said that there'll be an increase in The United States of some 100,000 units.

Moderator

So I think that you've answered my question. Thank you. And one clarification, if I may, about the North America market. You said the ZEV regulation will become reality. But what is the realistic number And also the hybrid ratio for this fiscal year is 25%, I thank you.

Moderator

But next fiscal year, if it were to increase, what will be the ratio for next fiscal year? Can you add that explanation, please? Yes. About the hybrid ratio. Well, this year is about 25%.

Moderator

Next fiscal year, there will be an increase of 100,000 in North America, but I think the ratio will be 35%, a little more maybe, about 35%, I guess. And about the ZEV regulation, I was talking about the industry on the whole. I think it will be difficult to achieve that regulation standard. But, currently, looking at the situation, the regulation itself might become something more realistic. That was what I was trying to say here.

Moderator

So, I really don't have any specifics to talk about here. We're just thinking that the regulation might be loosened to a more realistic number. Thank you.

Remove Ads
Analysts
    • Moderator
Powered by Quartr
Earnings Conference Call
Honda Motor Q3 2025
00:00 / 00:00

Transcript Sections

Remove Ads