Honda Unveils Three-Year Roadmap to Rebuild Automobile Business, Targets Record ¥1.4 Trillion Operating Profit

Honda Motor Co., Ltd. President and Global CEO Toshihiro Mibe held a press briefing today to outline the company's comprehensive roadmap for rebuilding its automobile business and charting its future direction. The strategy, which spans the next three years, focuses on improving cost structure, increasing development efficiency, and enhancing the product lineup by concentrating corporate resources on priority regions.

The centerpiece of Honda's plan is a target to achieve consolidated operating profit, including its motorcycle and financial services businesses, of more than 1.4 trillion yen in the fiscal year ending March 31, 2029, which would represent an all-time high for the company. To reach this goal, Honda has identified three pillars for its initiatives: strategic reallocation of corporate resources, thorough strengthening of its manufacturing structure, and strategic utilization of external resources.

Strategic Reallocation of Corporate Resources

In response to shifting market demand, Honda will reallocate development and production resources to hybrid models, which are currently experiencing strong demand. Starting in 2027, the company will begin launching its next-generation hybrid models featuring an all-new hybrid system and platform. Honda plans to introduce 15 next-generation hybrid models globally by the end of the fiscal year ending March 31, 2030, primarily targeting North America as a priority region. In 2029, Honda will launch large-size hybrid models in North America in the D-segment and above.

Honda presented the world premiere of two prototypes, the Honda Hybrid Sedan Prototype and the Acura Hybrid SUV Prototype which are scheduled to go on sale within the next two years. The company is working to reduce the cost of its next-generation hybrid system by more than 30% compared to the 2023 system. Combined with a new platform and a newly developed electric AWD unit, Honda aims to improve fuel economy by more than 10% while delivering a high-quality, exhilarating driving experience unique to Honda.

Development of next-generation ADAS is progressing as planned, with market launch targeted for 2028. Honda plans to apply this technology to more than 15 models over a five-year period. In North America, Honda will reallocate all excess capacity at its Ohio auto plants to gasoline and hybrid vehicle production, making all its North American plants capable of producing hybrid models.

Honda is also converting part of the EV battery production lines at its joint venture with LG Energy Solution to hybrid battery production. The company will increase local content of motor and inverter assemblies by more than four times current levels to prepare for expanded hybrid production, reducing supply chain risks and mitigating the impact of U.S. tariffs.

Regional Strategies

Honda has positioned North America, Japan, and India as priority markets. In Japan, Honda will expand its EV lineup in the mini-vehicle (kei car) category, including the N-BOX EV scheduled for 2028. From 2028 onward, starting with the all-new Vezel, Honda will roll out next-generation hybrid models equipped with next-generation ADAS and expand high value-added models.

In India, Honda will begin introducing strategic models tailored to the local market in 2028 across two categories: vehicles under 4 meters in length and mid-size vehicles. The company will leverage its motorcycle business, which sells nearly 6 million units annually in India, to capture demand from customers upgrading to automobiles. Honda has established Honda Digital Innovation India and is launching a captive finance company to support sales.

In China, Honda will incorporate local business speed, strengthen product and cost competitiveness through locally sourced components, and introduce new energy vehicles built on platforms provided by local partners.

Manufacturing and Efficiency

Honda is pursuing fundamental cost reduction, thorough improvement of development efficiency, and establishment of a resilient manufacturing structure. The company is reassessing Honda-specific standards and proactively utilizing standardized components to improve global cost structure.

Through its "Triple Half" approach, Honda aims to reduce development cost, timeframe, and workload by half compared to 2025 levels. By leveraging digital environments and AI technology, Honda will halve development time for minor model changes starting this fiscal year, and for full model changes starting with projects in 2028. The company also aims to improve production efficiency by approximately 20% over the next five years.

Strategic Use of External Resources

Honda will flexibly utilize external resources, including the cost competitiveness and speed of local businesses in China and India. The company will not pursue complete in-house battery sourcing, instead fully utilizing L-H Battery facilities while improving operational efficiency by producing hybrid batteries. Honda has indefinitely suspended its Canadian EV value chain project to reassess procurement strategy.

Financial Outlook

Over the next three years, Honda will invest 6.2 trillion yen, including 0.8 trillion yen in EVs, 1.0 trillion yen in software, and 4.4 trillion yen in gasoline and hybrid vehicles. EV-related losses are expected to be resolved by fiscal 2029, with operating cash flow expected to exceed 7 trillion yen. Honda targets a 10% ROIC by fiscal 2031 and maintains a 3% DOE dividend target.

Motorcycle Business and Governance

Honda expects the global motorcycle market to expand to 60 million units by 2030 and plans to increase annual production capacity in India to 8 million units by 2028. The company will also enhance corporate governance by ensuring a majority of outside directors on its Board.