Trump's tariff policy has been inconsistent, and after setbacks for European and American car manufacturers, Japanese car companies have also seen their performance collapse.
Japanese car manufacturers—Honda and Nissan—both released financial reports on Tuesday that fell short of expectations. Honda was impacted by tariffs, with Q4 operating profit plummeting over 70% year-on-year, and a 12.2% decline in annual operating profit, along with a 24.5% drop in net profit. Honda's outlook for the future is also pessimistic, expecting a nearly 59%, 70.1%, and 6.4% year-on-year decline in operating profit, net profit, and revenue, respectively, for the fiscal year 2026.
Nissan announced that due to the impact of tariffs, 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. At the same time, Nissan has replaced most of its senior management and appointed a new CEO.
Additionally, Toyota expects to lose 180 billion yen in operating income within just two months, while Mazda has not released its annual performance forecast and warned that it could face a loss of 10 billion yen in just the month of April.
According to CCTV News, the U.S. previously imposed a 25% tariff on imported auto parts. The global automotive industry has already been widely affected by tariffs, and besides Japanese car manufacturers, European car manufacturers—Germany's Mercedes-Benz Group and Stellantis have withdrawn their performance guidance for this year, citing that tariffs have disrupted supply chains and driven up global car prices. Mercedes stated that the uncertainty brought by tariffs is too high to reliably assess this year's business development.
Other companies have also warned of significant financial losses . American car manufacturer—General Motors has significantly lowered its profit expectations due to exposure to tariffs of up to $5 billion, while Ford Motor Company expects to incur annual losses of $1.5 billion.
<h2>Honda's Q4 Operating Profit Plummets Over 70% Year-on-Year</h2>
On Tuesday, May 13, Japanese automotive giant Honda announced its Q4 and annual performance results for the period ending March 31.
<blockquote>
Q4 Operating Revenue: 5.36 trillion yen (approximately $47.26 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.
Annual Revenue: Increased by 6.2% year-on-year to 21.69 trillion yen, exceeding the expected 21.63 trillion yen.
Annual Operating Profit: Decreased by 12.2% year-on-year to 1.21 trillion yen, below the expected 1.41 trillion yen.
Annual Net Profit: Decreased by 24.5% year-on-year to 835.84 billion yen
2026 Performance Guidance:
</blockquote>
<blockquote>
Operating Profit: Expected to decline nearly 59% year-on-year to JPY 500 billion for the full year.
Net Profit: Expected to decrease by 70.1% year-on-year to JPY 250 billion.
Operating Revenue: Expected to decline by 6.4% year-on-year to JPY 20.3 trillion.
</blockquote>
Honda's financial results are released amid escalating trade tensions between the U.S. and the world, with the U.S. imposing a 25% tariff on foreign car imports, leading to a significant year-on-year decline in both operating profit and net profit for Honda. To avoid tariffs, Honda decided in March this year to move the production of its best-selling model, the Civic hybrid, from Mexico to the U.S.
In addition, Honda holds a pessimistic outlook for future performance, lowering nearly all financial indicators for the fiscal year ending March 2026, with expected operating profit declining nearly 59% year-on-year, net profit down 70.1% year-on-year, and revenue down 6.4% year-on-year.
According to data from Carpro, a U.S. automotive market research firm, in 2024, Asian automakers occupy six of the top eight spots in U.S. sales, with Honda ranking fourth.
As Japan's second-largest automaker, Honda stated that the 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. Honda stated in its report:
<blockquote>
&#34;In the future, we will carefully assess the impact of tariff policies and expand recovery measures while striving for further growth in operating profit.&#34;
</blockquote>
Additionally, Honda has adjusted its dividend policy, changing the dividend payout ratio from the traditional dividend payout rate to &#34;equity dividends,&#34; with an expected increase of JPY 2 per share in the current fiscal year, reaching JPY 70 per share.
In terms of mergers and acquisitions, in February, Honda and competitor Nissan terminated negotiations regarding a $60 billion merger, which, if successful, would have formed the world's third-largest automaker, behind Toyota and Volkswagen.
<h2>Nissan Global Layoffs of 15%</h2>
On the same day, Nissan Motor Co., Ltd. released its Q4 and full-year results for the period ending March 31.
Full-Year Results:
<blockquote>
Full-year operating profit of JPY 133.71 billion, estimated at JPY 138.5 billion;
Operating profit in Asia (excluding Japan) of JPY 57.27 billion, estimated at JPY 52.29 billion;
Operating loss in North America of JPY 38.32 billion, estimated profit of JPY 2.45 billion;
Operating loss in Europe of JPY 98.77 billion, estimated loss of JPY 91.25 billion.
</blockquote>
Fourth Quarter Results:
<blockquote>
Operating profit of JPY 5.79 billion, estimated at JPY 45.71 billion;
Net loss of JPY 676.05 billion (approximately $4.6 billion), estimated loss of JPY 128.85 billion;
Net sales of JPY 3.49 trillion, estimated at JPY 3.27 trillion;
</blockquote>
2026 Performance Guidance:
<blockquote>
Expected net sales of JPY 12.50 trillion, estimated at JPY 12.31 trillion;
Expected dividend of JPY 0.0, estimated at JPY 7.70.
Expected global automobile sales of 3.25 million units
Nissan stated in its financial report on Tuesday that it has decided not to release its operating profit forecast for the fiscal year ending March 2026. Additionally, Nissan announced plans to reduce the number of production plants from 17 to 10 by the fiscal year 2027 and to cut approximately 15% of its global workforce, or about 20,000 employees, which means an additional 11,000 layoffs on top of the 9,000 announced last November.
</blockquote>
The struggling Japanese automaker is working to turn things around, but due to aging models failing to attract consumers, Nissan has begun layoffs, cut production capacity, and replaced most of its senior management, including appointing a new CEO, Ivan Espinosa. After taking over as CEO, Espinosa has started to take more decisive actions than his predecessor, Makoto Uchida, who was criticized for not being aggressive enough in layoffs and production cuts.
Furthermore, the merger plans between Nissan and Honda failed earlier this year, leaving Nissan in urgent need of finding new partners. The pressure on Nissan's revival mission is immense, especially after the breakdown of merger negotiations, making the search for a &#34;savior&#34; more complicated.
Hon Hai Precision Industry Co., Ltd. (Foxconn) was once a potential partner, and Foxconn Chairman Liu Yangwei stated in February that Foxconn had approached both companies during the discussions of a merger between Nissan and Honda, proposing possible cooperation. As the manufacturer of the iPhone, Foxconn has clearly expressed its desire to assemble electric vehicles for Japanese automakers and signed an agreement with Mitsubishi Motors earlier this month to jointly produce electric vehicles.
However, Nissan's restructuring efforts face greater challenges, particularly as U.S. tariffs on imported cars and parts could have a 450 billion yen impact, further exacerbating the company's difficulties

NSANY

Affected by Trump's tariff policy, Japanese automakers Honda and Nissan both reported results that fell short of expectations. Honda's Q4 operating profit plummeted by more than 70%, and its annual net profit decreased by 24.5%, with a significant decline in performance expected for the fiscal year 2026. Nissan announced that it would not release its operating profit forecast for the fiscal year 2026 and plans to lay off 20,000 employees and close some production plants

- Japanese automakers Honda and Nissan reported disappointing financial results, significantly impacted by U.S. tariffs on imported vehicles.  
- Honda's Q4 operating profit plummeted over 70%, while Nissan announced plans to close factories and cut 20,000 jobs due to ongoing tariff pressures.  
- The global automotive industry faces widespread challenges, with European and American companies also revising profit forecasts amid rising costs and disrupted supply chains.

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Trump's tariffs "heavy blow" fall, Japanese car companies' performance collectively "collapse"