Operator: Thank you for taking time to attend Honda’s Financial Results Press Conference for the Fiscal Year Ended March 31, 2025. First, the executives in attendance. Director, President and Representative Executive Officer, Toshihiro Mibe.

Toshihiro Mibe: Hello, thank you.

Operator: Director, Executive Vice President and Representative Executive Officer, Noriya Kaihara.

Noriya Kaihara: This is Kaihara. Thank you for joining.

Operator: Director, Managing Executive Officer, Eiji Fujimura.

Eiji Fujimura: This is Fujimura. Thank you.

Operator: Mr. Mibe will give a summary of the financial results followed by Mr. Kaihara’s explanation of results of the fiscal year ended March 2025 and 2026 as well as shareholders’ return. Mibe present please.

Toshihiro Mibe: Thank you for your continued understanding of Honda’s business activities. The financial results for the fiscal year ended or FYE March 2025 and the outlook for FYE March 2026 are as follows: First summary of the financial results. Operating profit for the FYE March 2025 was JPY 1.213.4 trillion. In the fourth quarter of the same fiscal year, we changed the accounting method for automobile product warranty provisions. This onetime expense excluded operating profit was JPY 1.341 trillion. Motorcycle business saw strong unit sales globally, achieving record highs in unit sales, operating profit and operating profit margin. Automobile business saw a decline in unit sales mainly in China and ASEAN and was impacted by increased North American incentives for EVs. However, hybrid EV sales expanded.

Operating cash flow after R&D adjustments, which represents the source of future investment, remained as high as last fiscal year, reaching JPY 2.800 trillion. On consolidated financial results for FYE March 2026, the impact of tariff policies is huge combined with frequent revisions making it difficult to formulate an outlook. However, reflecting the full 12 months impact as well as recovery measures, we have set the minimum levels of operating profit at JPY 500 billion and net profit at JPY 250 billion. Motorcycle business plans to sell 21.3 million units, an increase year-on-year. Automobile business, despite significant tariff impact, hybrid EV sales will be boosted mainly in North America. Moving forward, the impact of tariff policies will be carefully assessed, recovery measures enhanced, while aiming for increased operating profit.

Regarding shareholder returns, at today’s Board of Directors meeting, a dividend policy change was decided. To improve capital efficiency and ensure stable shareholder dividends despite uncertainties, we will switch from the conventional payout ratio to DOE. Annual dividend will increase JPY 2 from JPY 68 to JPY 70 per share. Next, motorcycle and automobile business initiatives that support a stable revenue base. The motorcycle business is world number one in market share with annual sales of over 20 million units. Sharing platforms and powertrains combined with skill of merit of dominant unit sales allows for a low cost structure that surpasses other companies and thereby realized profit expansion. In automobile business, hybrid electric vehicle system costs have been reduced while enhancing marketability.

The current model profitability is 1.5x the previous model. Unit sales have expanded globally in particular North America. In the latter half of this decade, we plan to introduce next generation HEV models to evolve performance and cost efficiency. Next, initiatives for enhancing corporate value. Last fiscal year at this meeting, I explained our efforts to enhance corporate value in the past, present and future. Regarding past capital optimization efforts, the prospect is in sight as a result of last December’s decision to repurchase JPY 1.1 trillion of our shares. Meanwhile, looking at the present and future, the automotive industry environment has changed dramatically, requiring more than ever flexible response. Regarding automobile profitability, we will secure stable revenue through increased unit sales of hybrid EVs with better profitability, especially in North America, plus solid business foundation of our motorcycle and financial business.

Looking ahead, the electric vehicle market growth has slowed down more than expected. We reviewed trade timing of our comprehensive value change project in Canada and decided to postpone our large scale investments. Details of the electrification strategy trajectory change will be explained in our business update on May 20. Despite the continued uncertainty in business environment, Honda will maintain stable management through a resilient business portfolio by flexibly revising strategies according to market conditions, thereby enhancing corporate value. Next, Mr. Kaihara will give details of the financial results.

Noriya Kaihara: I will explain the results of the fiscal year ending March 2025, the outlook for FYE March 2026 and shareholder returns. First, regarding the group sales volume for FYE March ’25 of our motorcycle business is 20.572 million units sold mainly due to increase in Asia year-on-year. For Automobile businesses, 3.716 million units sold with the decline of volume in Asia or mainly in China. And for Power Product businesses, 3.7 million units sold with the decline mainly in Europe. Next, regarding the consolidated financial results for FYE March ’25. Starting from the FYE March 2025, we changed the method of measuring product warranty provisions to allocate for the sales of major automobile production sites so that they are measured comprehensively at the time of the sale.

While this will result in a onetime expense for FYE March 2025, it will allow us to limit the impact of product warranty expenses on earnings volatility from the fiscal year — this fiscal year onward. Such one-time impact has been reflected on the operating profit of the fiscal year, which marked JPY 1.2134 trillion. That was JPY 168.4 billion short of the previous period. Equity in earnings of affiliates was JPY 900 million, down by JPY 109.8 billion mainly due to the decline in sales volume in China. Net profit attributable to the owner of the parent decreased by JPY 271.3 billion totaling JPY 835.8 billion as Mr. Mibe explained in the beginning, the results, excluding the impact of the change in product warranty estimates in automobile businesses are shown on the right hand side of the slide.

Next, regarding factors of ups and downs of operating profit for the FYE March 2025 year-on-year. Operating profit was JPY 1.341 trillion [ph] down by JPY 40.8 billion year-on-year before reflecting the impact of the change in product guarantee estimates for the automobiles. The factors behind have been JPY 233.6 billion decline in profit due to sales impact, increase of JPY 525 billion in profit due to price and cost impact, JPY 85 billion decline in profit due to miscellaneous expenses, JPY 153.5 billion decline in profit due to the research and development expenses and JPY 93.6 billion decline in profit due to the Forex impact. Regarding the operating profit by business segment, for Motorcycle businesses, operating profit was JPY 663.4 billion, automobile businesses, JPY 243.8 billion, financial services businesses at JPY 315.6 billion and the Power Products and Other businesses JPY 9.4 billion operating losses.

Regarding the factors of our ups and downs for motorcycle business performance, the operating profit marked the record highest of JPY 663.4 billion up by JPY 107.2 billion year-on-year. With factors behind particularly of the sales impact, additional JPY 48.1 billion was made mainly due to sales volume increase. For price and cost impact, additional JPY 175.3 billion was made due to improved product value and effect of pricing in response to the inflationary impact caused by the depreciating currencies in emerging markets, JPY 20.1 billion decline in profit due to miscellaneous expenses, JPY 21.5 billion decline in profit due to research and development expenses and JPY 74.6 billion decline in profit due to foreign currency. Regarding factors of automobile businesses, operating profit before reflecting the impact of change of the estimates, profit declined by JPY 189.1 billion year-on-year, resulting in JPY 371.5 billion.

Sales impact, profit declined by JPY 333.7 billion due to sales volume reduction and increase of incentives to boost EV sales. For price cost impact, profit increased by JPY 336.5 billion due to pricing effect that commensurate with improved product values. Expenses, profit declined by JPY 38.2 billion for research and development expenses, profit declined by [indiscernible] mainly due to increased resources allocated mainly to EV. Currency exchanges, profit declined by JPY 26.7 billion. Regarding the cash flow situations, for FYE March 2025, the free cash flow of the operating companies, excluding the financial services businesses was JPY 665.8 billion, net cash balance at the end of the period was JPY 3.215.7 trillion and finally, operating cash flow post R&D adjustment was JPY 2.806.6 trillion and the consolidated earnings forecast for the fiscal year ending March 2026 regarding the group’s sales volume year-on-year.

For the second businesses, 21.3 million, units are expected, reflecting the increase in Asia. Automobile businesses, 3.62 billion [ph] units expected, reflecting decrease mainly in Asia. And the Power Products, 3.67 million units expected reflecting the decrease mainly in North America. Regarding the consolidated earnings outlook for the FYE March 26, operating profit is projected to be JPY 500 billion the net profit attributable owner of the parent company is JPY 250 billion. Forex assumption is set at JPY 135 for U.S. dollar throughout the year. Regarding factors behind our expecting operating profit year-on-year, the operating profit is expected to be JPY 1.402 trillion excluding the impact of exchange rate and tariffs, which is to maintain the same level as previous fiscal year.

Forex impact, JPY 452 billion decline in profit is expected, anticipating the preceding currencies of the emerging markets to U.S. dollar. And the impact of the tariffs is still being examined. However, the potential impact to the best of the knowledge as of now are incorporated in the forecast. Therefore, to mitigate the impact of the tariffs is projected to be JPY 200 million and to explain the factors behind comparison to year-on-year, due to sales impact, profit will go up by JPY 156.1 billion with sales for increase of motorcycles and automobiles in North America. Regarding price cost impact, profit will be up by JPY 250 billion due to price cost measured with improved product values. Expenses decreased by JPY 219.1 billion reducing profit.

Research and development expenses, it would increase by JPY 126 billion decreasing the profit. The forecast of the capital investments, depreciation, research and development spending, FY ’26 is in the slide. Regarding shareholder returns, Honda positions returning value back to shareholders as a top management priority, starting FYE March ’26, we will change our dividend policy and we will introduce DOE as a return indicator. We will strive to pay out aiming 40%. Despite the business environment being uncertain, we will realize more stable and continuous returns. For FYE March ’25, the year-end dividend is determined at JPY 34 per share and annual dividend at JPY 68 per share. And for FYE March ’26, expected dividend is to be JPY 70 per share, up by JPY 2 from the year before.

Regarding the share buyback of JPY 1.1 trillion that we made a decision on December 23, 2024, we have acquired the equivalent of about JPY 589.5 billion worth of the shares as of the April 30, 2025. That concludes my explanation. Thank you very much for your attention.

Operator: Thank you very much for your listening. And now we would like to proceed to Q&A. Please use the Zoom link that has been provided to you beforehand. In the interest of time, please limit your questions to two per person. When asking, please turn on your camera and microphone. Those of you who have questions, please indicate so with the raise hand button, please. The first question from Nikkei, with Okinaga, please.

Unidentified Analyst: This is Okinaga from Nikkei. Thank you. USMCA about the tariff, for the per time being, there were to be exception, but you have added on JPY 650 billion. So what is the reason for this? And what is the breakdown? Can you explain? That’s the first question. And the second question about the postponement in Canada, Can you explain about the reason for that?

Toshihiro Mibe: Well, first, about the tariff. Yes, we have estimated JPY 650 billion, but finished cars and components included the tariff is very complicated and the calculation that we have done and the basis for this calculation. I think you’ve seen this, but for the finished cars from Canada to United States, also from Mexico to U.S. and from Japan to the United States. Well, there are different conditions that needed to be taken into consideration, and the result is shown on the right hand side. And also about the components, well, USMCA, if it’s within the USMCA, the components are exempt, but there’s from Tier 1, Tier 2 to Tier 3 components. And therefore, we need to have the country of origin certification, and this is not fixed yet.

So 25% is being included, because we have yet to obtain the certificate. So this included is JPY 650 billion. And, the motorcycle business is written under. There is an impact, so it’s a JPY 30.6 billion impact. Power products, again about JPY 24.3 billion. So added, it comes to JPY 650 billion. Well, this is the minimum at the bottom. And well, I think the tariff impact will continue to change as time goes by, and we have to think about these major changes taking place. Well, in the middle, we talk about the automobile parts here in the middle here. And there are parts which are exempt from the tariff, but the amount and volume has not yet to be looked into. So it’s included 25%. And this is said to be JPY 220 billion. So these are the amounts that we have calculated.

But if we scrutinize and come up with the details, there will be a number of components which will be exempt from the tariffs. So against JPY 500 billion how much can be added on is something that we have to look into. So this, the operating profit of JPY 500 billion, this is the bottom, the minimum. And so please understand this number to be that way. And how we are going to respond to these tariffs, that included, it’s we want to make a recovery from this JPY 500 billion. About the specifics of how we will respond to, well, up until March, Canada, Mexico exports. We want to promote this and build up the inventory in the United States. And we have been taking such measures up to that time. And in the short run, internally, we want to reduce our costs, thoroughly reduce our costs.

And in addition to that, the allocation of the finished products, we want to optimize. So this has been reported in newspaper, and the Civic 5-door hybrid, which is being produced in Yori, there are the components. So, up until June, September, they’ll be produced in Japan, but then after, will be transferred to Indiana. And HCM, the Canada CRV, for the United States, ELP will be producing instead in the United States. So we are thinking about the production allocation, optimizing the allocation where possible. And also for the dealers and suppliers, stakeholders, we are co creating so as to minimize the impact of tariffs. And about the prices, well, we have to observe what competitors are doing and think about the revision range and which models for which we will revise our prices.

So we want to be careful and carefully observe what is happening. In the mid-term, if the tariff measures are to be in place for a long time, then we will have to increase our production capacity in United States. We’ve already begun studies on this. And first, we have to think about the CapEx. Well, in the United States, they have a two shift, but maybe we can increase to three shift production and also operating over the weekend. There is room to increase the production capacity in United States, and we are trying to look into what will happen as a result of that. And then after will be the CapEx, capital expenditure. But at any rate, we have to secure workers and to think about the impact on the supply chain, because it will be huge. We want to observe what is happening and at the appropriate timing, think what needs to be done.

We want to be prudent in such efforts in dealing with tariff measures. About, the Canada case, well, last year, on April 25th, we had made an announcement and the EV 240,000, and battery 36 gigawatt per hour and also the PASCO Futures and Asahi Kasei, their joint venture. So CAD $15 billion worth of investment, and it was planned to restart operation in 2028. We did make that announcement back then. This was thinking that BB demand would increase in the future, and we have to think about the upstream resources and the downstream service. And we wanted to enhance our Canada value chain so as to create the Electrification business in the future. But as you know, in North America, the EV market growth is slowing down. And so as of now, we think that we should postpone for at least 22 years.

This has been decided USMCA. We are thinking that this will not change USMCA. If the conditions were to change, at that point in time we have to revisit this. As per the specifics, what happens after two years and the starting time of the project, we have to observe what is happening and ultimately make the decision. We are consulting with the Canadian government and Ontario, province. And as for this postponement, we have already received their consent. That is all from me. Anything to add?

Eiji Fujimura: Well, yes. We have provided some additional information, and we have included the premises for the tariff calculation estimation. Well, we have looked at others competitors information that have been disclosed, and I think the condition setting is quite different company-by-company. And, so we’re wondering how we should be looking at this, and so we’ve included this summary. Well, the Japanese companies, over the past week or so, have been announcing different things, including or not excluding certain factors at GM and Ford, for example. They’ve disclosed information. And looking at what they’re doing, they well, it’s a nine month impact because they closed the books in December. But GM, so they’re looking at JPY 4,000 billion, JPY 5,000 billion nine month impact.

And so annually, it will come into some JPY 500 billion. Of the JPY 650 billion, as Mibe has said, we have motorcycle business excluding, it’s about JPY 500 billion. So it’s more or less, well, so I think they are JPY 900 billion, whereas we are JPY 500 billion. And Ford also, they have a high ratio of U.S. production. And so likewise, if you calculate in terms of 12 months, it’s JPY 450 billion. So it’s close to our number. In Japan, the analysts calculating the net impact and it’s about JPY 300 billion, but we are JPY 450 billion. So they’re saying that ours is high, the impact, but we are high by JPY 150 billion versus because the motorcycle BP and also the components, tariff impact. As we’ve explained, well, USMCA, whether we can comply or not on the components level is not clear to us.

We have to look into the details. And therefore, we are conservative in terms of including this. And from Mexico, of the imports for Mexico, there’s Prologue, the battery EV from GM. And this is also included. So I think of this as the reason for this difference. So JPY 450 billion appears to be quite big, but I think compared to other OEMs or the media analysts, though there is a slight gap, I think we are more or less thinking about the same image. So we’ve added a summary of our estimation assumptions for your reference.

Operator: Thank you very much, Mr. Okinaga. So next question Yomiuri Newspaper, Mr. Narahashi, please.

Unidentified Analyst: Narahashi from Yomiuri Newspaper Company. Can you hear me? Thank you. I have two questions. One, as Mr. Fujimura said earlier, competitors estimate or not estimate the impact by the tariff. However, you decided that you disclose your estimates in details. What is your intention by doing that? And second question is about a relationship with Nissan. You had or they had well — those talks were broken up because of business situations over there. But they have announced to make recovery plans, and it is difficult for them to survive being alone. However, what is the relationship with them going forward? Would that be the collaborative relationship or any business integration talks be back again?

Toshihiro Mibe: So let’s start with the tariff by Mr. Fujimura and Nissan for myself.

Eiji Fujimura: So thank you very much for your question. So we decided to disclose our assumption because the Forex and business economic environments are many uncertainties in those areas. But despite that, we decided that it will be the guideline like this because this is something we should do as a business company. And there are areas which is very, very uncertain, And still, we decided to look into the situation as far as we could assess. And of course, the interpretation of the taxation law is difficult, too. And we had our own interpretation with the help of the American Honda, Representative and estimated impact on the yearly annual business. We decided to assist that and share that with people outside. And even within the company, we could have a better understanding of the potential impact internally in the short term, midterm, long-term.

We could come up with a kind of mitigation measures. And then there are things we could do internally as a mitigation or things which can collaborate with the supplier, or we could look for the way to speak to the authority, the politics for instance. And there can be those potential mitigation measures that we could think of and then put them on the table. And then it is a big negative impact, really and that would give negative impressions in a way to you. However, this is the worst case scenario. Then we can then try to find out what we could do going forward. I’m not sure if I answer your question. However, this is what we have in mind in disclosing such estimate to you. So JPY 500 billion, that is the amount. And in order to make it kind of more reasonably accepted number, we decided to share with you those tables with you to understand better about it.

And then, with the Nissan, as of the 13th of February, I will disclose to you about our decision not to go for it. And there is no further progress after that. And besides, we had the strategic partnership MOU that was entered in August of last year, which include Mitsubishi Automotive, and we continue to work on that to try to maximize the collaboration efforts, anticipating the joint research for the next generation platforms and commonize the platforms and the environment and circulation, energy resources and so on. And those areas are being assessed as well once again in greater details. And also, today, we are in a very different environment too, including tariff situation too. And we are thinking about further collaboration potential in the new environment.

And again, the business integration talks will not be on the table for more while going forward. However, we need to try to maximize the benefit out of the collaborative efforts besides and we’d like to go on with this strategic partnership so that we can find out new directions for the growth of the businesses so that we can gain the competitiveness to lead the industry going forward, and we will make a progress in that regard. So that is all for Nissan. Thank you very much.

Operator: Thank you. Thank you very much, Mr. Narahashi. And next question is from Asahi Shimbun Newspaper. Mr. Nishiyama, please. Can you hear us?

Unidentified Analyst: Yes, sorry. Yes. I’m Nishiyama from Asahi Shimbun Newspaper. I have two questions. The first question for the next fiscal year, your outlook, well, you’ve given the explanation. But overall, well, I think the profit is quite going to be dropped or declined. But what is your view on this, Mr. Mibe? And you said that you’re going to take various measures to make a recovery. Can you talk about the specifics? And secondly, about the unit sales outlook, well, I think well, the motorcycle was a positive, but there will be a drop in demand due to the Trump tariffs. So what about incentives? So, I think of that, there is a race for incentives. So what are the measures they’re going to take? Well, you said that you don’t want to add this on to the prices, but still, well, I think you have to compare yourself to the competitors, but what are your thoughts on this?

Toshihiro Mibe: About your first question about outlook, well, I’m looking at the previous fiscal year. Well, I talked about the new provision, the comprehensive warranty provision and also the EV provision with GM. We have about JPY 1.1 trillion operating profits. So I think it is more or less online, so, the automobile. So, there is a drop of 43 million units and including the 21,000 United States, so we think that we can ensure this much profit. And also and so the motorcycle 660 and power product 310. So we are generating a JPY 1 trillion profit. For the automobile, it’s a little less than JPY 400 billion but for BEV, the gross profit is minus JPY 200 billion and RD is minus JPY 400 billion, so BEV is minus JPY 600 billion and ICE including hybrid is about JPY 1 trillion profit.

So it is such a business. And automobile ICE and motorcycle and financial services, we will earn profit there and continue investment for electrification plus the investors’ return. And we have tried to balance this and this was the case in the previous fiscal year. And now about the [indiscernible] as I explained, we are looking at JPY 135 against the dollar. This is quite conservative, but still JPY 135. So it’s about JPY 450 billion negative from JPY 150. And also, there is the recovery of 200 and so net is JPY 450 billion. And altogether, well, this is based on the information that we have locally about as Mr. Fujimura said, the, USMCA compliant parts are zero as of now. And we think that there will be less of an impact as a result of this.

In the first quarter, I think that we can enhance the precision of our calculation. And with the recovery measures, we want to try to reduce the impact. And so well, it’s just if, but the currency have impact. Had we not had this, I think it will be more than our previous fiscal year. We do have the capability to generate the same operating profit. So how we exclude and recover from the impact of the tariff policies and to what extent we can do this will determine how much of an improvement we will see for this fiscal year. And about this fiscal year, the JPY 500 billion, well the BEV market is cooled down and there’s a one-time loss possibility accounting wise. This could become a discussion. So, well, we have JPY 200 billion factored in for that.

So that included the JPY 500 billion is thought to be the bottom. And how we can add on to that and improve will be the challenge for our business for this fiscal year. About the U.S. market and so the impact of the tariff policies demand, well, on May 20, we will give you our business update and we’ll report on the details at that time. But EV market growth is slowing down and we have to shift our plan to a certain extent. So put it another way, hybrid, which is our strength, I think we can increase to quite an extent our production. Our hybrid right now does have product competitiveness to quite an extent. Incentive wise, hybrid was less than $1,000. So that is the level of, so we want to expand our hybrid so as to in North America including United States compete.

We think that we can compete there. And so from ’25 to ’30, the automobile business, including preparing for BEV. We want to control well and think about the resources to inject so that from the period from 2025 to 2030 it will be in transitional period, which will be very challenging. But we think our automotive business can expand. That is our current thinking.

Unidentified Analyst: That’s all for me.

Operator: Anything else? No, okay.

Noriya Kaihara: Yes. Well, just to add to the North America explanation, well, at the end of last fiscal year, the Passport LX, we had rather fresh new models in place and it’s being well received. So that plus, as Mr. Mibe has said, the hybrid Accord, Civic, CR-V, well, these models are still receiving a lot of high appraisal from our customers. And I think we can compete in the marketplace with these models. As of now, North America market on the whole, well, I think just like last fiscal year, we think the market size will be more or less the same, but we have to think about the impact of the tariff policies on the total demand as Mr. Mibe has said. So we have to be adaptive flexibly to the changes that take place and support sales.

Unidentified Analyst: That is all. Thank you.

Toshihiro Mibe: Thank you.

Operator: Thank you, Mr. Nishiyama. Next question, Toyo Keizai, Mr. Yokoyama, please.

Unidentified Analyst: Yokoyama from Toyo Keizai, can you hear me? Hello. Two questions, please. First one is, you talked about, Mr. Mibe, about the years from ’25 through 2030, and the tariff impact will continue on not just this year, but next fiscal year. And I was like 8%, 10% range for the ROS. And apparently, this year you have a one off one time [indiscernible] amount. What is your target profitability in mind? You said that investment in Canada is to be suspended, but Mr. Trump, he’s focusing on the tariffs. But in the future, there will be the talk about the environment as well. But how much efforts would you like to make for the battery EVs? And would you like to revisit your targets going forward for 2030 or ’40? And I’d like you to give us your thoughts for the amid long-term span.

And the second question is about human resources issue. In EPO. Mr. Aoyama, the Executive Vice President retired due to inappropriate conduct. And Mr. Aoyama had a very broad area to be looking after. And then this year, he has been gone. And how do you like to address the loss of him? And of course, Kaihara-san is here in Western have been promoted. And how do you like to address the changes of those human resources?

Toshihiro Mibe: So Fujimura-san is going to explain the first part and then the rest by myself.

Eiji Fujimura: Thank you very much, Mr. Yokoyama. It is a difficult question in a way because in a business update, we would be able to give you some ideas about it. However, at high level for the BEV, we are going to delay the resources to invest. And from 2025 to ’40, for the carbon neutrality targets, we need to have the battery EVs be prepared in terms of the number of the models or the volume to be appropriate. We will continue to prepare for that. That will be of the level of a certain level of the efforts for the gross margin and R&D efforts and so on. But as per the gross margin up until the 2030, I shouldn’t say too much because we anticipate a business update opportunity next round, but we are going to have new technology based battery EVs, lots of prospective ones.

And then the question is how much profitable it can be going forward. And then also, we have made investment for the battery factories so far. And there are some negative areas that we could accept as well from that too. But the battery fees, how much of a profit we can take, that’s one thing. And then as I said earlier, ICE models, with the current Forex of JPY 150, the ICE model can get us JPY 1 trillion revenue. And the contracts is going to change. However, we are going to continue and have to reduce, of course, of the ICE models going forward. And then besides, I’d like to make the BEVs a bit more competitive with the next generation models be added and will keep getting profit from ICE whilst doing that efforts. And ROIC, ideally, should be achieved to be greater than the financial cost.

10% ROIC target is no change, and we need to have the 7% to 8% rose to achieve that. And then it does not just really for the 2026, ’27 so on, but from 2025 through 2030, we will manage those indicators this way. And then, BEV’s efforts and AVS CV target for 2040, your question is about our target for that. And then, in Trump’s administration, there are environment measures and regulations have been kind of with the SEC2 and so on. However, though it is not finalized, they probably would revisit them quite substantially. And then the plans we had, especially with regard to the volume, would not be the error that we would have to persist to going forward. However, for carbon neutrality, the BEVs could be the optimal solution to achieve it. That’s the starting idea.

And Honda have announced that Zero Series EVs earlier, and we would like to push forward the plans as we had planned already. Of course, the volume may be a little bit down in terms of the production volume. The number of the models may be a little bit less than we were anticipating, but we need to continue on our efforts launching those products to stay competitive. And those products have to evolve by themselves based on the competitions in the market. We need to allow that. And the BEVs will be, of course, be available from our company continually. We will continue to do that. But in the next five years, the U.S. market would have a slower progress of the EV use. And then from 2030 onwards, maybe we can accelerate our actions for the environment.

But still, the final goal still stands, that is the carbon neutrality 2050. And then how we get there, what route we get there, we need to assess that once again, but our capital neutrality target in 2050 must stand. And then we have to, again, reassess the situations to be in 2040. And we anticipate people would drive the cars for 10 years. And then in 2040, we need to make the carbon neutrality kind of vehicles available. And I wouldn’t say that we are visiting them substantially, but we need to look into the scenario from 2030 to 2040 given the environment in this period. And by 2030, I can say that electrification strategy need to be revisited. And as for Mr. Aoyama, he has resigned from his position, and I really feel that we like to extend our deep apology for to uplink our people such as customers, suppliers, shareholders, and our colleagues, all the stakeholders.

And then Mr. Kaihara is going to cover as the Executive Vice President, and Mr. Inoue is going to be the Head of the Automobile Business Division, and he is going to look into the operations of that area. And each business domain is actually supported by the leading persons, and I’m very sure that those human allocation will be good enough to keep going in a good way. Thank you very much.

Operator: Thank you, Mr. Yokoyama. Are there any other questions? [indiscernible], please.

Unidentified Analyst: Can you hear me?

Toshihiro Mibe: Yes.

Unidentified Analyst: My name is Binamisa [ph], and I’m substituting for Mr. Ui [ph]. Question to Mr. Mibe, the President. Well, yesterday, the U.S.-China have decided to reduce significantly tariff, but U.S.-Japan negotiations, what are your expectations, if any towards those negotiations?

Toshihiro Mibe: Well, about those U.S.-Japan negotiations, I mean, is still ongoing? On our part, we want to see that there is a global free trade because this will be the best for our business. In the case of Honda, we are not exporting from Japan to U.S. In such a large volume, so there is little impact there. But USMCA, well, we have the policy of to produce where the demand exists. And therefore, based on this policy, we have been doing global business. But in Mexico, Canada, and United States, that is the USMCA, based on this agreement, we are looking at this North America as one single market and build a supply chain in North America, including these three countries. And about, the U.S.-Japan tariff negotiation, it’s not just limited to United States.

USMCA is the basis of our business, and therefore, we want the USMCA to be in place so that we can do business in a free environment not just Mexico and Canada, but also for the American auto industry. I think this is the best answer, best solution. So for us, we want to see that the free trade environment can be rebuilt. And we want to approach the government and others so that this will be realized. In the past, we’ve been doing this, but we will continue to work, to try to make this happen. That is all.

Operator: Thank you very much, Mr. Binamisa. And it’s time for us to end. With this, we’d like to conclude the financial results press conference. As per the materials that have been presented, please refer to them on our website. Once again, thank you for your participation.

AI Assistant

HONDA MOTOR CO LTD

Q4 2025

Earnings Transcript

Find Answers

Ask about any part of the document to get insights, explanations, or key details.