Trump's Tariff "Hammer" Falls, Japanese Automakers' Performance "Collapses" Collectively

As Trump's tariff policy fluctuated repeatedly, after European and American automakers suffered setbacks, Japanese automakers' performance also collapsed.

Japanese automakers Honda and Nissan both reported financial results on Tuesday that fell short of expectations. Honda, affected by tariffs, saw its Q4 operating profit plummet by over 70% YoY, with a 12.2% decline in operating profit and a 24.5% drop in net profit for the full year. Honda also adopted a relatively pessimistic outlook for the future, projecting that its operating profit, net profit, and revenue for the fiscal year 2026 will decline by nearly 59%, 70.1%, and 6.4% YoY, respectively.

Nissan, on the other hand, announced that due to tariff impacts, it has decided not to release its operating profit forecast for the fiscal year ending March 2026, and will close some production plants, planning to lay off 20,000 employees by the fiscal year 2027. Meanwhile, Nissan replaced most of its senior management and appointed a new CEO.

In addition, Toyota expects its operating income to decrease by 180 billion yen in just two months, while Mazda has not released its full-year performance forecast and warned that it may face a loss of 10 billion yen in April alone.

According to CCTV News, the US previously imposed a 25% tariff on imported auto parts. The global automotive industry has already been widely affected by tariffs. In addition to Japanese automakers, European automakers such as Germany's Mercedes-Benz Group and Stellantis have withdrawn their performance guidance for this year, citing tariffs that have disrupted supply chains and driven up global auto prices. Mercedes-Benz stated that the uncertainties brought about by tariffs are too high to reliably assess this year's business development.

Other companies have warned of significant financial losses.US automakers such as General Motors, facing tariff exposure of up to $5 billion, have significantly lowered their profit forecasts, while Ford Motor Company expects to incur annual losses of $1.5 billion.

Honda's Q4 operating profit plummeted by over 70% YoY

On Tuesday, May 13, Japanese automotive giant Honda reported its fourth-quarter and full-year performance for the period ending March 31.

Q4 revenue: 5.36 trillion yen (approximately $4.726 billion), in line with the expected 5.36 trillion yen.

Q4 operating profit: 73.5 billion yen, far below the expected 275.52 billion yen.

Full-year revenue: increased by 6.2% YoY to 21.69 trillion yen, higher than the expected 21.63 trillion yen.

Full-year operating profit: decreased by 12.2% YoY to 1.21 trillion yen, below the expected 1.41 trillion yen.

Full-year net profit: decreased by 24.5% YoY to 835.84 billion yen.

Performance guidance for 2026:

Operating profit: It is expected that the full-year operating profit will decline by nearly 59% YoY to 500 billion yen.

Net profit: Down 70.1% YoY to JPY 250 billion.

Operating revenue: Down 6.4% YoY to JPY 20.3 trillion.

Honda's financial results were released amid escalating trade tensions between the US and the world, with the US imposing a 25% tariff on foreign car imports. Honda's operating profit and net profit both fell sharply YoY. To avoid tariffs, Honda decided in March this year to shift the production location of its popular car model, the Civic Hybrid, from Mexico to the US.

In addition, Honda is pessimistic about its future performance outlook, having revised down almost all financial indicators for the fiscal year ending March 2026. It expects operating profit to fall nearly 59% YoY, net profit to drop 70.1% YoY, and revenue to decline 6.4% YoY for the full year.

According to data from Carpro, a US automotive market research firm, in 2024, Asian automakers accounted for six of the top eight car producers by sales volume in the US, with Honda ranking fourth.

As Japan's second-largest car maker, Honda stated thatthe impact of global tariff policies will have a very significant effect on its business, and frequent policy adjustments make it difficult for Honda to make accurate forecasts.In its report, Honda said:

"In the future, we will carefully assess the impact of tariff policies and expand recovery measures while striving to achieve further growth in operating profit."

In addition, Honda also adjusted its dividend policy, changing the dividend payout ratio from the traditional payout rate to "equity dividends." It expects the dividend per share for the current fiscal year to increase by JPY 2 to JPY 70 per share.

In terms of M&A, in February, Honda and its rival Nissan terminated negotiations on a USD 60 billion merger deal. If successful, the merger would have created the world's third-largest car maker, after Toyota and Volkswagen.

Nissan to cut 15% of global workforce

On the same day, Nissan Motor Co., Ltd. released its Q4 and full-year results for the period ending March 31.

Full-year results:

Full-year operating profit: JPY 133.71 billion (vs. estimated JPY 138.5 billion);

Operating profit in Asia (excluding Japan): JPY 57.27 billion (vs. estimated JPY 52.29 billion);

Operating loss in North America: JPY 38.32 billion (vs. estimated profit of JPY 2.45 billion);

Operating loss in Europe: JPY 98.77 billion (vs. estimated loss of JPY 91.25 billion).

Q4 results:

Operating profit: JPY 5.79 billion (vs. estimated JPY 45.71 billion);

Net loss: JPY 676.05 billion (approximately USD 4.6 billion) (vs. estimated loss of JPY 128.85 billion);

Net sales: JPY 3.49 trillion (vs. estimated JPY 3.27 trillion);

2026 performance guidance:

Expected net sales: JPY 12.50 trillion (vs. estimated JPY 12.31 trillion);

Expected dividend: JPY 0.0 (vs. estimated JPY 7.70).

Global auto sales for the full year are expected to reach 3.25 million units.

In its earnings report released on Tuesday, Nissan stated that it had decided not to issue an operating profit forecast for the fiscal year ending March 2026. Additionally, Nissan announced plans to reduce the number of its production plants from 17 to 10 by fiscal 2027 and to cut approximately 15% of its global workforce, or about 20,000 employees. This means that on top of the 9,000 job cuts announced in November last year, an additional 11,000 employees will be laid off.

The struggling Japanese automaker is striving to turn the tide, but due to its aging car models failing to attract consumers, Nissan has begun laying off staff, reducing production capacity, and replacing most of its senior management, including appointing a new CEO, Ivan Espinosa. After taking over as CEO, Espinosa has started implementing more decisive measures than his predecessor, Makoto Uchida, who was criticized for not being proactive enough in implementing layoffs and production cuts.

Furthermore, Nissan's merger plans with Honda failed earlier this year, leaving Nissan in urgent need of finding new partners. The pressure to revive Nissan is immense, especially after the breakdown of merger talks, making the search for a "savior" even more complex.

Hon Hai Precision Industry Co., Ltd. (Foxconn) was once a potential partner. Liu Young-way, Chairman of Foxconn, stated in February that Foxconn had approached both Nissan and Honda during their merger discussions, proposing possible cooperation. As the manufacturer of the iPhone, Foxconn has clearly expressed its intention to assemble EVs for Japanese automakers and signed an agreement with Mitsubishi Motors earlier this month to jointly produce EVs.

However, Nissan's restructuring efforts face even greater challenges, particularly the potential impact of 450 billion yen from US tariffs on imported cars and parts, further exacerbating the company's difficulties.