Honda Lowers 2025 Sales Outlook as Chip Woes, EV Rivals Mount

Honda Motor has reduced its full-year vehicle sales forecast and profit outlook to 3.34 million units for the current fiscal year, down 110,000 vehicles from previous estimates, reflecting production declines linked to ongoing semiconductor shortages. The company also reported continued supply chain disruptions and heightened competition from Chinese electric vehicle (EV) manufacturers.

“The impact of chip scarcity continues to constrain output,” Honda said in its report, adding that the shortages partly stem from disruptions involving the Dutch semiconductor company Nexperia, which the Netherlands government placed under state control on Sept. 30 due to its ownership ties to China’s Wingtech.

Honda also projected a ¥385 billion (US$2.6 billion) impact from U.S. tariffs—lower than the ¥450 billion previously estimated. However, the company’s shares fell 4.7% on Nov. 10 following the announcement.

While tariffs and component shortages have weighed on short-term results, executives emphasized that the greater long-term challenge lies in the rapid global expansion of Chinese EV manufacturers. “In markets like Thailand, competition is intense, and we have lost our price competitiveness,” said Executive Vice President Noriya Kaihara during a press conference.

The rising influence of Chinese automakers has eroded Japan’s traditional dominance in Southeast Asia—a region that had long served as a key growth market for its automotive industry. “We used to believe our Asian markets outside China were insulated from the slowdown in the Chinese auto sector. That assumption is no longer valid,” Kaihara said.

In response, Honda and other Japanese manufacturers are introducing incentives and price cuts to sustain customer interest, though these measures are expected to compress profit margins on new vehicles.