Q2 2025 Honda Motor Co Ltd Earnings Call

November 7, 2025

Speaker #1: I would now like to start Honda Motor Company Limited's financial results briefing for the second quarter of the fiscal year ending March 2026. First of all, allow me to introduce the attendees today.

Noriya Kaihara: We would now like to start Honda Motor Co., Ltd.'s financial results briefing for Q2 of fiscal year to March 2026. First of all, allow me to introduce the attendees today. Director, Executive Vice President, and Representative Executive Officer, Mr. Noriya Kaihara. Good to see you. Director, Managing Executive Officer, Mr. Eiji Fujimura. Good to see you, everyone. Operating Executive, Head of Accounting and Finance Unit, Mr. Masao Kawaguchi. Good to see you, everyone. Mr. Kaihara will first present the financial results of Q2 ended 30 September 2025, and forecast of consolidated results for the fiscal year ending in March 2026. Mr. Fujimura will present the details. Over to you, Mr. Kaihara. I thank you very much for your continued support for Honda's activities. I would like to present to you the financial results for the Q2 of financial year to March 2026.

Operator: We would now like to start Honda Motor Co., Ltd.'s financial results briefing for Q2 of fiscal year to March 2026. First of all, allow me to introduce the attendees today. Director, Executive Vice President, and Representative Executive Officer, Mr. Noriya Kaihara.

Speaker #1: Director Executive Vice President and Representative Executive Officer Mr. Noriya Kaihara , good to see you . Director . Managing Executive Officer Mr. Eiji Fujimura , good to see you .

Noriya Kaihara: Good to see you.

Operator: Director, Managing Executive Officer, Mr. Eiji Fujimura.

Eiji Fujimura: Good to see you, everyone.

Speaker #1: Everyone . Operating Executive Head of Accounting and Finance Unit , Mr. . Masao Masao Kawaguchi . Good to see you . Everyone . Mr. Kihara will first present the financial results of the second quarter ended September 30th of 25 and forecasts of consolidated results for the fiscal year ending in March 26th .

Operator: Operating Executive, Head of Accounting and Finance Unit, Mr. Masao Kawaguchi.

Masao Kawaguchi: Good to see you, everyone.

Operator: Mr. Kaihara will first present the financial results of Q2 ended 30 September 2025, and forecast of consolidated results for the fiscal year ending in March 2026. Mr. Fujimura will present the details. Over to you, Mr. Kaihara.

Speaker #1: Then Mr. Fujimura will present the details. Over to you, Mr. Kihara. I thank you very much for your continued support for Honda's activities.

Noriya Kaihara: I thank you very much for your continued support for Honda's activities. I would like to present to you the financial results for the Q2 of financial year to March 2026.

Speaker #1: I would like to present to you the financial results for the second quarter of the financial year ending March 26th. I would like to start with the highlights of the financial results.

Noriya Kaihara: I'd like to start with the highlights of the financial results. Our operating profit for the Q2 of the year to 26 March came to JPY 438.1 billion. Motorcycle operations saw unit sales decline in Vietnam, but global sales trended solidly and strongly, led by Brazil. For results up to Q2, we've attained the record high unit sales, operating profit, and operating margin. In Automobile operations, though there were some positive profit impact due to price revisions, we saw a decline in profit due to impact from tariffs and one-time expenses related to EV. operating cash flow after R&D adjustment, which indicates the resource available for future investment, came to JPY 1,281.3 billion, on par with the same period last year.

Speaker #1: Our operating profit for the second quarter of the year to March 26th came to ¥438.1 billion. Motorcycle operations saw unit sales decline in Vietnam, but global sales trended solidly and strongly, led by Brazil for results up to the second quarter.

Speaker #1: We've attained record-high unit sales, operating profit, and operating margin in our automobile operations, though there was some positive profit impact due to price revisions.

Speaker #1: We saw a decline in profit due to the impact from tariffs and one-time expenses related to EV. Operating cash flow after R&D adjustment, which indicates the resources available for future investment, came to ¥1,000,000,000 or $1,000 billion, on par with the same period last year.

Speaker #1: The forecast for the consolidated results for the term ending in March 2026 is operating profit of ¥550 billion and profit for the year of ¥300 billion.

Noriya Kaihara: The forecast for the consolidated results for the term ending in 26 March is operating profit of JPY 550 billion and profit for the year of JPY 300 billion. We are revising the previous forecast considering the decline in Automobile unit sales and the reduction in production volume expected as of now due to semiconductor shortage, though we expect profit growth due to yen depreciation. In Motorcycles operations, while we expect declines in unit sales in Vietnam, we hope to recover this in other regions, thus we maintain 21.3 million units. For Automobiles, in addition to lower sales volume, mainly in China and ASEAN, declines due to semiconductor shortage has been taken into consideration for North America. We are revising down from 3.62 million to 3.34 million units.

Speaker #1: We are revising the previous forecast, considering the decline in automobile unit sales and the reduction in production volume expected as of now due to the semiconductor shortage. Though we expect profit growth due to yen depreciation in motorcycle operations.

Speaker #1: While we expect declines in unit sales in Vietnam , we have hope to recover this in other regions . Thus , we maintain 21.3 million units for automobiles .

Speaker #1: In addition to lower sales volume, mainly in China and ASEAN, declines due to semiconductor shortages have been taken into consideration for North America.

Speaker #1: We are revising down from 3.62 million to 3.34 million units. To give you the consolidated results for the second quarter of the year to March 26th, operating profit was ¥438.1 billion, lower by ¥304.4 billion compared to the same period last year.

Noriya Kaihara: To give you the consolidated results for the Q2 of the year to 26 March 2024, operating profit was JPY 438.1 billion, lower by JPY 304.4 billion in compared to the same period last year. Investment earnings due to the equity method were JPY 10.8 billion, higher by JPY 31.6 billion. The half-year profit attributable to the owner of the parent was JPY 311.8 billion, lower by JPY 182.8 billion. Next, I'd like to cover the forecast for the consolidated results for the term ending in 26 March 2024. Compared to the previous forecast, our forecast is operating profit of JPY 550 billion, down by JPY 150 billion.

Speaker #1: Investment earnings due to the equity method were ¥10.8 billion, higher by ¥31.6 billion, and the half-year profit attributable to the owner of the parent was ¥311.8 billion, lower by ¥182.8 billion.

Speaker #1: Next , I'd like to cover the forecast for the consolidated results for the term ending in March 26th , compared to the previous forecast , the forecast is operating profit of ¥550 billion , down by ¥150 billion , and the profit for the year attributable to the owner of the parent of ¥300 billion , down by ¥120 billion .

Noriya Kaihara: The profit for the year attributable to the owner of the parent of JPY 300 billion, down by JPY 120 billion. The exchange rate against the US dollar is assumed at JPY 145 for the full year period. Forecast for the full year dividend for the fiscal year ending in March 26 is JPY 70 per share, unchanged from the previously published forecast. Next, Mr. Fujimura will present the details of the results. Allow me to present the results. The group unit sales during the six months to Q2 were as follows. Compared to the same period last year, for Motorcycle operations, though there was a decline, there was a decline in Vietnam, with growth mainly in Brazil and the Philippines, it came to 10.763 million units.

Speaker #1: The exchange rate against the US dollar is assumed at ¥145 for the full year period. Forecasts for the full year dividend for the fiscal year ending in March 26th are ¥70 per share, unchanged from the previous year.

Speaker #1: Published forecast . Next , Mr. Fujimura will present the details of the results . Allow me to present the results . The Group unit sales during the six months to the second quarter were as follows .

Eiji Fujimura: Allow me to present the results. The group unit sales during the six months to Q2 were as follows. Compared to the same period last year, for Motorcycle operations, though there was a decline, there was a decline in Vietnam, with growth mainly in Brazil and the Philippines, it came to 10.763 million units.

Speaker #1: Compared to the same period last year for motorcycle operations , though , there were declined . There was a decline in Vietnam , with growth mainly in Brazil and the Philippines .

Speaker #1: It came to 10.763 million units for the automobile business. It came to 1.68 million units due to declines, mainly in China for power products, though there were declines in Asia.

Noriya Kaihara: For automobile business, it came to 1.68 million units due to declines made in China. For Power Products, though there were declines in Asia, Europe led the growth, and the total came to 1.699 million units. The consolidated results during the six months to Q2 were as explained earlier. Next, I'd like to present the factor analysis of operating profit for Q2 compared to the same period last year. Operating profit was JPY 438.1 billion, down by JPY 304.4 billion compared to the same period last year. Factors affecting the operating profit were, our first impact from sales was positive by JPY 83.9 billion due to expanding motorcycle unit sales.

Eiji Fujimura: For automobile business, it came to 1.68 million units due to declines made in China. For Power Products, though there were declines in Asia, Europe led the growth, and the total came to 1.699 million units. The consolidated results during the six months to Q2 were as explained earlier. Next, I'd like to present the factor analysis of operating profit for Q2 compared to the same period last year. Operating profit was JPY 438.1 billion, down by JPY 304.4 billion compared to the same period last year. Factors affecting the operating profit were, our first impact from sales was positive by JPY 83.9 billion due to expanding motorcycle unit sales.

Speaker #1: Europe led the growth, and the total came to 1.699 million units. The consolidated results during the six months to the second quarter were, as explained earlier.

Speaker #1: Next, I would like to present the factor analysis of operating profit for the second quarter compared to the same period last year. Operating profit was ¥438.1 billion, down by ¥304.4 billion compared to the same period last year.

Speaker #1: Factors affecting the operating profit were our first impact from sales, which was positive by ¥83.9 billion due to expanding motorcycle unit sales. The selling price and cost factors showed an increase of ¥162.4 billion due to effective price revision expenses.

Eiji Fujimura: Selling price and cost factors was an increase of JPY 162.4 billion due to effective price revision. Expenses gave us a negative impact of JPY 26 billion. R&D expenses led to a profit decline of JPY 20.4 billion. Our currency effect resulted in a negative impact of JPY 116.2 billion. EV related, a one-time expense led to a negative impact of JPY 223.7 billion. Impact from tariff led to profit decline of JPY 164.3 billion. Our trial calculation, excluding the EV related one-time expenses and the tariff impact, comes to operating profit of JPY 836.2 billion on par with the same period last year. Regarding operating profit by business segment, Motorcycles, JPY 368.2 billion.

Speaker #1: Gave us a negative impact of ¥26 billion. R&D expenses led to a profit decline of ¥20.4 billion, and a currency effect resulted in a negative impact of ¥116.2 billion.

Speaker #1: Related , a one time expense led to a negative impact of two ¥23.7 billion . And impact from tariffs are led to profit decline of one ¥64.3 billion .

Speaker #1: Our trial calculation , excluding the EV related onetime expenses and the tariff impact , comes to operating profit of 8.3 ¥6.2 billion , on a par with the same period last year .

Speaker #1: Regarding operating profit by business segment motorcycles ¥368.2 billion . Automobiles , ¥73 billion of losses and financial services hundred and ¥43.2 billion profit and the power production and other businesses .

Eiji Fujimura: Automobiles, JPY 73 billion of losses. The Financial Services, JPY 143.2 billion profits. Under Power Product and Other Businesses, we put up JPY 200 billion of losses. Operating profit of our Motorcycle business was at JPY 368.2 billion, up by JPY 42.4 billion year-on-year due to the following factors. Regarding the sales impact, JPY 60.2 billion increase by additional sales volume, mainly in Asia and South America. Regarding the price and cost impact, profit increased by JPY 32.3 billion due to the effective price revisions and so on. JPY 7 billion decline of the profits are due to expenses. JPY 3.5 billion positive profit by R&D.

Speaker #1: We put up ¥200 billion in losses. The operating profit of the motorcycle business was ¥368.2 billion, up by ¥42.4 billion year on year.

Speaker #1: Due to the following factors regarding sales impact, there was a ¥60.3 billion increase from additional sales volume, mainly in Asia and South America. Regarding the price and cost impact, profit increased by ¥32.3 billion due to effective price revisions and so on.

Speaker #1: ¥7 billion declined over the profit due to expenses , ¥3.5 billion positive profit by R&D and ¥41.3 billion profit declined due to the foreign currencies and ¥5.3 billion decline of the profit due to tariffs in automobile businesses .

Eiji Fujimura: JPY 41.3 billion profit decline due to the foreign currencies. A JPY 5.3 billion decline of the profit due to tariffs. In Automobile Businesses, operating profit declined by JPY 331 billion year-on-year, resulting in JPY 73 billion operating losses due to the following factors. Regarding sales impact, profit declined by JPY 24.5 billion, accounting for the losses associated with the restructuring of the group companies. Price cost impact, increase of the profit by JPY 130 billion due to the effective price revisions and so on. Expenses, JPY 33.8 billion increase of profits. Research and development, a JPY 24.4 billion decline. Foreign currency effect, JPY 64 billion decline.

Speaker #1: Operating profit declined by ¥331 billion year on year, resulting in a ¥73 billion operating loss due to the following factors regarding sales impact.

Speaker #1: Profit declined by ¥24.5 billion , accounting for the losses associated with the restructuring of the group . Companies . Price . Cost impact .

Speaker #1: Increase of the profit by ¥130 billion due to the effective price revisions and so on. Expenses ¥33.8 billion. Increase of profit.

Speaker #1: Research and development ¥24.4 billion . Decline . Foreign currency effect ¥64 billion . Decline . At one time I . Related expenses ¥223.7 billion .

Eiji Fujimura: At one time, our EV related expenses, JPY 223.7 billion decline. At tariff impact, profit declined by JPY 158.1 billion. Next, regarding the cash flow situations. Our free cash flow, excluding our financial businesses, was JPY 760.6 billion. Net cash balance at the end of the first half was JPY 3,053.9 billion. Operating cash flow after R&D adjustment was JPY 1,281.3 billion. Next, I'll explain consolidated forecast for fiscal year ending March 2026.

Speaker #1: Decline and a tariff impact . Profit declined by ¥158.1 billion . Next , regarding the cash flow situations , a free cash flow excluding financial businesses was ¥760.6 billion , net cash balance at the end of the first half was ¥3,000,000,000,053.9 billion , and operating cash flow after R&D adjustment was ¥1,000,000,000,281.3 billion , next , I'll explain consolidated forecast for fiscal year ending March 2026 .

Speaker #1: Regarding the group's unit sales as compared to the previous forecast, the motorcycle business is reflecting a reduction in volume in Asia and an increase in regions, mainly in Brazil and others.

Eiji Fujimura: Regarding the group's unit sales as compared to the previous forecast, in Motorcycles businesses, reflecting reduction in volume in Asia and increase in regions mainly in Brazil and others, we will maintain the volume of 21.3 million units. In Automobiles businesses, in addition to the volume decline and mainly in Asia, we reflect a volume reduction by 110,000 units in North American region due to the impact of the semiconductor shortages. Thus, we would expect the volume to be 3.34 billion units. In Power Product businesses, though some regional reviews to reflect it, we will keep the previous forecast of 3.67 million units. I've explained and consolidated the business forecast of the fiscal year ending March 2026.

Speaker #1: We will maintain the volume of 21.3 million units in the automobile business. In addition to the volume decline, mainly in Asia, we reflect a volume reduction of 110,000 units in the North American region due to the impact of the semiconductor shortages.

Speaker #1: Thus, we would expect the volume to be 3.34 billion units in PA productive businesses. There were some regional reviews to be reflected.

Speaker #1: We will keep the previous forecast of 3.67 million units. I have consolidated the business forecast of the fiscal year ending March 2026.

Speaker #1: Next, I'll explain the factors contributing to the ups and downs of property profits year on year. The operating profit would decline by ¥663.4 billion year on year because of the following factors regarding the sales impact.

Eiji Fujimura: Next, I'll explain factors of ups and downs of pro-parenting profits year-on-year. The operating profit would decline by JPY 663.4 billion year-on-year because of the following factors. Regarding the sales impact, all the losses were put up in conjunction with the group company's restructuring. Thanks to the unit volume increase of Motorcycles and so on, we expect the profit to increase by JPY 3.3 billion. Regarding price and cost impact, a JPY 280 billion increase of the profit is expected due to the price revisions and so on. Expenses decline by JPY 91.5 billion. R&D expenses decline of profit by JPY 126 billion.

Speaker #1: Although losses were incurred in conjunction with the Arab Group, companies are restructuring due to the unit volume increase of motorcycles and so on. We expect profit to increase by ¥3.3 billion.

Speaker #1: Regarding price and cost impact, ¥280 billion, an increase in profit is expected due to the price revisions and so on.

Speaker #1: Expenses decline by ¥91.5 billion . R&D expenses declined of profit by ¥126 billion . Foreign currency impact declined by ¥214 billion , and a gross tariff impact declined of profit by ¥385 billion , and the potential decrease of the production volume due to the semiconductor supply shortages is incorporated in the forecast .

Eiji Fujimura: Foreign currency impact, a decline by JPY 214 billion. A gross tariff impact, a decline of profit by JPY 385 billion. The potential decrease of the production volume due to the semiconductor supply shortages is incorporated in the forecast based on the current assumptions, which would be JPY 150 billion negative. Next, I'll explain the factors behind the operating profit changes and expectations comparing to the previous forecast. Operating profit is expected to decline by JPY 150 billion from the previous guidance because...

Speaker #1: Based on the current assumptions, we expect a negative net of ¥150 billion. I'll explain the factors behind the operating profit changes in expectations compared to the previous forecast.

Speaker #1: Operating profit is expected to decline by ¥150 billion from the previous guidance because of the error regarding the sales impact, incentive hikes, unit sales, and so on. The unit sales decrease of the automobiles has also contributed to this decline.

Noriya Kaihara: Of the, regarding the sales impact, incentive hikes, and unit sales decrease of the Automobiles and so on, the profit would decline by JPY 83 billion. Regarding price cost impact, we revisited the recovery from the tariff impact, thus the profit would decline by JPY 70 billion. Regarding foreign currency impact, because of changes of the exchange rate, 245 JPY for dollar, JPY 88 billion positive profit on that. For tariff, we scrutinized the impact of in values, it will be JPY 65 billion positive. Regarding semiconductor shortage, the impact will be JPY 150 billion negative for the profits. Lastly, this is the forecast of the capital expenditures, depreciation and amortization under R&D expenditures. That is all. Thank you very much for your attention.

Eiji Fujimura: Of the, regarding the sales impact, incentive hikes, and unit sales decrease of the Automobiles and so on, the profit would decline by JPY 83 billion. Regarding price cost impact, we revisited the recovery from the tariff impact, thus the profit would decline by JPY 70 billion. Regarding foreign currency impact, because of changes of the exchange rate, 245 JPY for dollar, JPY 88 billion positive profit on that. For tariff, we scrutinized the impact of in values, it will be JPY 65 billion positive. Regarding semiconductor shortage, the impact will be JPY 150 billion negative for the profits. Lastly, this is the forecast of the capital expenditures, depreciation and amortization under R&D expenditures. That is all. Thank you very much for your attention.

Speaker #1: The profit would decline by 83 billion . Regarding price cost impact , we revisited the recovery from the tariff impact . Thus , the profit would decline by ¥70 billion .

Speaker #1: Regarding the foreign currency impact due to changes in the exchange rate to ¥145 for the dollar, we expect a positive profit of ¥88 billion from tariffs. After scrutinizing the impact of these values, we anticipate it will be ¥65 billion positive.

Speaker #1: And regarding the semiconductor shortage, the impact will be ¥150 billion negative for the profit. Lastly, this is the focus of the capital expenditures, depreciation, and amortization.

Speaker #1: And R&D expenditures . That is all . Thank you very much for your attention . Thank you very much for your attention . Then we'd like to proceed to the Q&A session .

Noriya Kaihara: Thank you very much for your attention. We'd like to proceed to the Q&A session. We will take questions through Zoom, which you have been informed about in advance. Due to the time restriction, we'd like to limit it to two questions per person. Please turn on the camera and the microphone on when you want to ask the question. Please use the Raise Your Hand button to let us know if you have a question. Okay. The first question. Ms. Ukita from The Yomiuri Shimbun. I hope you can hear my voice. Yes, we can. My first question is the Motorcycles is operating great. For Automobiles, it's JPY 73 billion losses. I'm sure there are tariff and semiconductor impact.

Operator: Thank you very much for your attention. We'd like to proceed to the Q&A session. We will take questions through Zoom, which you have been informed about in advance. Due to the time restriction, we'd like to limit it to two questions per person. Please turn on the camera and the microphone on when you want to ask the question. Please use the Raise Your Hand button to let us know if you have a question. Okay. The first question. Ms. Ukita from The Yomiuri Shimbun.

Speaker #1: We will take questions through zoom , which you have been informed about and advance due to the time restriction . We like to limit it to two questions per person , and please turn on the camera and the microphone on when you want to ask the question .

Speaker #1: So please use the 'Raise Your Hand' button to let us know if you have a question. Okay, the first question is from Ms. Akita from Umri Newspaper.

Naoko Ukita: I hope you can hear my voice.

Speaker #1: I hope you can hear my voice. Yes, we can. My first question is, so the motorcycle operating rate is up, and then for automobiles, it's a ¥73 billion loss.

Noriya Kaihara: Yes, we can.

Naoko Ukita: My first question is the Motorcycles is operating great. For Automobiles, it's JPY 73 billion losses. I'm sure there are tariff and semiconductor impact.

Speaker #1: So, I’m sure there are terrorists, terrorists, and semiconductor impacts. But I just want to, well, ask for your input on your general comment on your prospects for the future.

Noriya Kaihara: I just want to, well, ask for your input on your general comment on your prospects for the future. Okay. Let me take that question. The overall, our overall perception. For details, I will ask Mr. Fujimura for some more comments. First of all, for motorcycle, we had the best record, a high result. We had decline in Vietnam. In Brazil and Thailand, we were able to maintain our good profit. For the second half, for the full year, we expect things to proceed fairly well. We need to be consider considering about whether we can cover the potential decline in Vietnam. I think generally speaking, it should be okay.

Naoko Ukita: I just want to, well, ask for your input on your general comment on your prospects for the future.

Noriya Kaihara: Okay. Let me take that question. The overall, our overall perception. For details, I will ask Mr. Fujimura for some more comments. First of all, for motorcycle, we had the best record, a high result. We had decline in Vietnam. In Brazil and Thailand, we were able to maintain our good profit. For the second half, for the full year, we expect things to proceed fairly well. We need to be consider considering about whether we can cover the potential decline in Vietnam. I think generally speaking, it should be okay.

Speaker #1: Okay . Let me take that question . The overall our our overall perception . And then for details , I will ask Mr. Fujimura for some more comments .

Speaker #1: First of all, for motorcycles, we had the best record, achieving high results. However, we have seen a decline in Vietnam.

Speaker #1: But in Brazil and Thailand, we were able to maintain our good profit for the second half. So for the full year, we believe we expect things to proceed fairly well.

Speaker #1: So we are we need to be consider considering about whether we can cover the potential potential decline in Vietnam . But I think generally speaking , it should be okay for automobiles .

Noriya Kaihara: For Automobiles, with the ICE and HEV, gave us some cash so far. Now we need to spend that money into intelligence and hybrid, sorry, electric vehicles. We have been doing okay. In North America, we have the HEV, good sales revenues. We believe that the profitability has been increasing, improving. However, because of the tariff directive and also due to the changes in environmental regulations, the business environment has been changing dramatically. For tariffs, I think compared to other OEMs, we have a pretty high local procurement ratio in North America. In that sense, I think the impact should be limited. Still, we have over JPY 300 billion impact. For the tariffs, actually, in a sense, as Mr.

Speaker #1: So, with the ICE, we have received some cash so far. Now we need to spend that money on intelligence and hydrogen hybrid. We'll be sorry.

Speaker #1: Electric vehicle . So we have been doing okay in the North America . We have the have good sales revenues . So we hope the we believe that the profitability has been increasing , improving .

Speaker #1: However, because of the tariff directive and also due to the changes in environmental regulations, the business environment has been changing dramatically for tariffs.

Speaker #1: I think compared to other OEMs, we have a pretty high local procurement ratio in North America. So, in that sense, I think the impact should be limited.

Speaker #1: Still, we have three over ¥300 billion impacts. So, for the tariffs, actually, in a sense, as Mr. Eiji Fujimura mentioned, we consider this as a new normal, which we believe will continue for some time in the future.

Noriya Kaihara: Fujimura mentioned, it, we consider this as new normal, which we believe would continue for some time in the future. While we can maintain the good results in North America, but the sales volume in China and Asia has been declining. Particularly in Asia, the profitability for the HEV and the ICE will worsen beyond our expectations. We would need some fundamental changes and actions for those. For future actions, what we are thinking of, we need to maintain or build, maintain the build in Asia and Oceania, the world profitability structure to gain, make gains from ICE and in HEV. The number of models and the number of volume.

Speaker #1: And while we can maintain the good results in North America , but the sales volume in China and Asia has been declining , particularly in Asia , they profitability for the heavy and the ice will worsen beyond our expectations .

Speaker #1: So we would need some fundamental changes and actions for those . So for future actions , what we are thinking of , we need to maintain or build maintain the build in Asia and Oceania , the world profitability structure to gain , make gains from ice and have so the number of models and the number of volume .

Speaker #1: So we need to revise our investment plans so that we need to further reinforce our competitiveness of a have . So we need to further enhance the profitability and Ice and health .

Noriya Kaihara: We need to revise our investment plans so that we need to further reinforce the competitiveness of HEV. We need to further enhance the profitability in ICE and HEV. We do need to review our product lineup. We need to focus our attention in our profitable models. We need to invest in those. We need to really bring up the overall volume. In particular, in line with the current situation, we need to rationalize the fixed expenses. I think that's something we need to work on quickly. Also for BEV, so far we have been, well, making quite a lot of expenditures. For future, by shifting over to our own BEV, we will need to have a break even at least.

Speaker #1: So we do need to review our product lineup. And then we need to focus our attention on our profitable models.

Speaker #1: And then we need to invest in those. So we need to really bring up the overall volume, and in particular, in line with the current situation.

Speaker #1: We need to rationalize the fixed expenses . I think that's something we need to work on quickly . And also for Bev , so far , we have been well , making quite a lot of expenditures .

Speaker #1: So for future , by shifting over to our own Bev . So we would need to have a break even at least . So we need to keep curb the losses .

Noriya Kaihara: We need to keep curb the losses, I would say, going forward. For tariffs, as I mentioned, we believe this is going to continue into the future as well. We want to go by the policy of produce where there is demand so that we can combat work on through our supply chain, the impact from the tariffs. That's something we'll continue. Particularly for the improvement of profitability for automobiles, that's something we need to do. Overall, we need to improve our profitability overall. Anything you want to add in terms of number? Okay. Ms. Ukita, thank you for your question. This time for the we have the JPY 438 billion. The automobile is JPY 73 billion losses.

Speaker #1: I would say going forward. And then for tariffs, as I mentioned, we believe this is going to continue into the future as well.

Speaker #1: So we want to go by the policy of producing where there is demand so that we can combat through our supply chain the impact from the tariffs.

Speaker #1: That's something we will continue , particularly for the improvement of profitability for automobiles . That's something we need to do . And overall we need to improve our profitability overall .

Speaker #1: Anything you want to add in terms of numbers? Okay. Miss Okita, thank you for your question. This time for the...

Eiji Fujimura: Okay. Ms. Ukita, thank you for your question. This time for the we have the JPY 438 billion. The automobile is JPY 73 billion losses.

Speaker #1: We have the ¥438 billion . So the automobile is ¥73 billion . Losses . And then for motorcycle , it's 370 positive . So for motorcycles , it's the best , highest record .

Noriya Kaihara: For Motorcycles, it's 370 JPY positive. For Motorcycles, it's the best, highest record. Those are pretty peculiar numbers that we've got here. As we've mentioned from the beginning of the term, there's a lot of noise, kinda external factors for... For the, to add a little bit about the 438 billion JPY, we have this impact, this negative of 450 billion JPY. That's the one time cost. The 890 billion JPY, that's our normal standardized performance, I'd say. This 450 billion JPY negative, as introduced in the material, we have 160 billion JPY due to tariffs.

Eiji Fujimura: For Motorcycles, it's 370 JPY positive. For Motorcycles, it's the best, highest record. Those are pretty peculiar numbers that we've got here. As we've mentioned from the beginning of the term, there's a lot of noise, kinda external factors for... For the, to add a little bit about the 438 billion JPY, we have this impact, this negative of 450 billion JPY. That's the one time cost. The 890 billion JPY, that's our normal standardized performance, I'd say. This 450 billion JPY negative, as introduced in the material, we have 160 billion JPY due to tariffs.

Speaker #1: So those are pretty peculiar numbers that we've got here . But . As we've mentioned from the beginning of the term , there's a lot of noise kind of external factors for .

Speaker #1: So for the to add a little bit about the ¥438 billion , we have this impact , this negative of ¥450 billion . That's the one time cost .

Speaker #1: So the ¥890 billion, that's our normal standardized performance. I'd say these are ¥450 billion negative, as introduced in the material.

Speaker #1: We have the we have ¥160 billion due to tariffs . And then the EV provision for losses . We will allocate ¥250 billion throughout the year .

Noriya Kaihara: The EV provision for losses, we will allocate JPY 250 billion throughout the year. We have put it in the budget. Of that, we allocated JPY 225 billion of that into the first half. We have the group restructuring. We have some losses from the transfer of our subsidiary, which is JPY 43 billion, and also in the financial operations. In the US and the UK, we had some settlement for like JPY 20 billion for litigation. Put them together, it is JPY 890 billion. We have like JPY 20 billion for financials, but most of this was related to Automobiles. If we...

Eiji Fujimura: The EV provision for losses, we will allocate JPY 250 billion throughout the year. We have put it in the budget. Of that, we allocated JPY 225 billion of that into the first half. We have the group restructuring. We have some losses from the transfer of our subsidiary, which is JPY 43 billion, and also in the financial operations. In the US and the UK, we had some settlement for like JPY 20 billion for litigation. Put them together, it is JPY 890 billion. We have like JPY 20 billion for financials, but most of this was related to Automobiles. If we...

Speaker #1: So we have put it in the budget . And then of that we allocated ¥225 billion of that into the first half . And then we have the group restructuring .

Speaker #1: So we have incurred some losses from the transfer of our subsidiary, which amounts to ¥43 billion, as well as from our financial operations.

Speaker #1: And in the US and the UK . We had some settlement for like of like ¥20 billion for litigation . So put them together .

Speaker #1: It's it's 890 billion . So we have like a ¥20 billion for financials . But most of this was related to automobiles . So if we well all of those included , we have this ¥73 billion losses for automobiles .

Noriya Kaihara: Well, all of those included, we have this JPY 73 billion losses for Automobiles. Versus the plans, as I mentioned, those noises or the external factors were, had almost been uncooperated. What may have been excluded may have been the financial operations and then also the Asia and China volume decline. Those were worse than our initial anticipation. For the full year impact for the full year at the beginning of the fiscal year, what I mentioned was that we were thinking of JPY 500 billion. That was our target that we mentioned at the very beginning.

Eiji Fujimura: Well, all of those included, we have this JPY 73 billion losses for Automobiles. Versus the plans, as I mentioned, those noises or the external factors were, had almost been uncooperated. What may have been excluded may have been the financial operations and then also the Asia and China volume decline. Those were worse than our initial anticipation. For the full year impact for the full year at the beginning of the fiscal year, what I mentioned was that we were thinking of JPY 500 billion. That was our target that we mentioned at the very beginning.

Speaker #1: So versus the plans , as I mentioned , those noises or the external factors are were had almost been incorporated . What may have been excluded may have been the financial operations .

Speaker #1: And then also the Asian and China volume decline . Those were worse than the our initial anticipation . So for the full year impact for the full year , at the beginning of the fiscal year , what I mentioned was that we were thinking of ¥500 billion .

Speaker #1: That was the that was our target that we mentioned at the very beginning . But compared to the last . Fiscal year , it's we have a negative for ¥50,000,000,450 billion due to exchange rate .

Noriya Kaihara: Compared to the last fiscal year, it's, we have a negative of JPY 450 billion, JPY 450 billion due to exchange rate, and we need to recover from that. That's another tariff, JPY 450 billion, JPY 900 billion. All of that put together. JPY 1.4 trillion, that's our actual performance. We put it together, the prospects or the forecast for the year is JPY 500, against JPY 550 billion. Because of the exchange rate, semiconductors and the tariffs, it's came to like JPY 1.3 trillion. That's about the idea we have. We initially, we used to say JPY 1.4 trillion.

Eiji Fujimura: Compared to the last fiscal year, it's, we have a negative of JPY 450 billion, JPY 450 billion due to exchange rate, and we need to recover from that. That's another tariff, JPY 450 billion, JPY 900 billion. All of that put together. JPY 1.4 trillion, that's our actual performance. We put it together, the prospects or the forecast for the year is JPY 500, against JPY 550 billion. Because of the exchange rate, semiconductors and the tariffs, it's came to like JPY 1.3 trillion. That's about the idea we have. We initially, we used to say JPY 1.4 trillion.

Speaker #1: And we need to recover from that. That's the another tariffs for $50 billion. So a ¥900 billion. So all of that put together.

Speaker #1: So ¥1.4 trillion. That's our actual performance. But we put it together. The prospects for the forecast for the year is ¥500 billion against ¥550 billion.

Speaker #1: Because of the exchange rate semiconductors and the tariffs . It's came came to like ¥1.3 trillion . That's about the idea . We have .

Speaker #1: We initially we used to say ¥1.4 trillion , that we said ¥1 trillion was the financial , financial operations . And automobile and motorcycle and the rest was automobiles .

Noriya Kaihara: That we said JPY 1 trillion were the financial operations and automobile, motorcycle, and the rest was automobiles, and then the battery EV of JPY 600 billion negative. For the motorcycles on finance, we have the Vietnam in decline, but they were used to say JPY 1 trillion, but we have recovered. It's JPY 1 trillion is okay. For the JPY 100 billion decline, at that time, we were thinking of BEV losses from JPY 600 billion. We had a provision of JPY 50 billion. Put that together, JPY 650 billion. We used to say ICE or JPY 1 trillion back then. That came down to JPY 900 billion. That's as far as it declined.

Eiji Fujimura: That we said JPY 1 trillion were the financial operations and automobile, motorcycle, and the rest was automobiles, and then the battery EV of JPY 600 billion negative. For the motorcycles on finance, we have the Vietnam in decline, but they were used to say JPY 1 trillion, but we have recovered. It's JPY 1 trillion is okay. For the JPY 100 billion decline, at that time, we were thinking of BEV losses from JPY 600 billion. We had a provision of JPY 50 billion. Put that together, JPY 650 billion. We used to say ICE or JPY 1 trillion back then. That came down to JPY 900 billion. That's as far as it declined.

Speaker #1: And then the battery EV of ¥600 billion . Negative . But for the motorcycles on the finance , we finance , we have the Vietnam in decline .

Speaker #1: But they used to say ¥1 trillion . But we have recovered . So it's ¥1 trillion . Is okay . But for the ¥100 billion decline at that time , we were thinking of a Bev losses from ¥600 billion .

Speaker #1: But we had a provision of a ¥50 billion . So put that together , ¥650 billion . We used to say , or ¥1 trillion back then .

Speaker #1: Now that came down to ¥900 billion . That's that's as far as it declined . So putting those together because of our business structure as Mr. Kihara mentioned , first we need to reboost our profitability in the ice .

Noriya Kaihara: Putting those together, because of our business structure, as Mr. Kaihara mentioned, first we need to reboost our profitability in the ICE. For battery EVs, JPY 560 billion. This is the gross profit of JPY 250 billion. That's all for the provisions. Now we have ended putting in the provision. We're going to start the... We will try to eliminate, we'll try to bring down the negative from the gross profit level, as close as zero to possible. The rest will be for R&D expenditures. Probably we'll come to JPY 450 billion. That will be the baseline for the next year.

Eiji Fujimura: Putting those together, because of our business structure, as Mr. Kaihara mentioned, first we need to reboost our profitability in the ICE. For battery EVs, JPY 560 billion. This is the gross profit of JPY 250 billion. That's all for the provisions. Now we have ended putting in the provision. We're going to start the... We will try to eliminate, we'll try to bring down the negative from the gross profit level, as close as zero to possible. The rest will be for R&D expenditures. Probably we'll come to JPY 450 billion. That will be the baseline for the next year.

Speaker #1: And then for battery EV , it's five , six , 50 billion . This is the this is the gross profit of a 250 billion .

Speaker #1: That's all for the provisions. Now we have ended up putting in the provision. So we're going to start the... we will try to eliminate.

Speaker #1: We'll try to bring down the negative from the gross profit level, because we want to get as close to zero as possible. The rest would be for R&D expenditures.

Speaker #1: So, probably we'll come to ¥450 billion. So, that would be the baseline for the next year. And then for the tariffs as well.

Noriya Kaihara: For the tariffs as well. Of course, we do have JPY 330 billion or so impact, so we will need to work through those, how much of this recover in a few years. I just mentioned that PL a little bit, but for the cash expenditure control is well in place. If you look at the balance sheet and the cash flow, the strength of those are continuing as well. Particularly for the cash control, we need to have a good monitor over that. With the need to recover our PL, P&L for the Automobiles quickly. Having said that, of course, we need to put in our resources to prepare ourselves for the future.

Eiji Fujimura: For the tariffs as well. Of course, we do have JPY 330 billion or so impact, so we will need to work through those, how much of this recover in a few years. I just mentioned that PL a little bit, but for the cash expenditure control is well in place. If you look at the balance sheet and the cash flow, the strength of those are continuing as well. Particularly for the cash control, we need to have a good monitor over that. With the need to recover our PL, P&L for the Automobiles quickly. Having said that, of course, we need to put in our resources to prepare ourselves for the future.

Speaker #1: Of course, net we do have ¥330 billion. Also, impact. So we will need to work through those. How much of this will we cover in a few years?

Speaker #1: I just mentioned a PL a little bit , but the for the cash expenditure control is well in place . So if you look at the balance sheet and the cash flow , the strength of those are continuing as well .

Speaker #1: So particularly for the cash control , we need to have a good monitor over that . And then with the need to recover our RPL , PNL for the automobiles quickly , and then having said that , of course we need to put in our resources to prepare ourselves for the future .

Speaker #1: So we want to put those together, and then we want to do a stable dividend with the dough. We want to be able to provide a stable dividend to our shareholders as well.

Noriya Kaihara: We want to put those together, we want to do a stable dividend with the DOE. We want to be able to provide a stable dividend to our shareholders as well. We want to have a good P&L and balance sheet balance. We want to have a good well-balanced structure. We want to gain, recover our profitability for the time being now, and also get prepared for the future. For Automobiles, as I mentioned, we do have a keen sense of our crisis, we are ready to take actions. Thank you very much. Thank you very much. One more question, may I? You said already perhaps about impact by the chips. It's already incorporated in those values, about JPY 150 billion.

Eiji Fujimura: We want to put those together, we want to do a stable dividend with the DOE. We want to be able to provide a stable dividend to our shareholders as well. We want to have a good P&L and balance sheet balance. We want to have a good well-balanced structure. We want to gain, recover our profitability for the time being now, and also get prepared for the future. For Automobiles, as I mentioned, we do have a keen sense of our crisis, we are ready to take actions. Thank you very much.

Speaker #1: So we want to have a good PL and balance sheet balanced . We want to have a good well balanced structure . And then so we want to recover our profitability for the time being now and also get prepared for the future for automobiles .

Speaker #1: As I mentioned, we do have a keen sense of crisis, and then we are ready to take actions. Thank you very much.

Naoko Ukita: Thank you very much. One more question, may I? You said already perhaps about impact by the chips. It's already incorporated in those values, about JPY 150 billion.

Speaker #1: Thank you very much . My question . May I ? You said already perhaps about impact by the chips . It's already incorporated in those values .

Speaker #1: But ¥150 billion, and in North America, there is this impact in reality. But what is the prospect for procurement, and do you think the situation will improve or get worse?

Noriya Kaihara: In North America, there is this impact in reality. What is the prospect for the procurement? Do you think the situation will improve or getting worse? Do you have a risk of such, please tell us. I will answer the question then. For the semiconductors, for the customers, suppliers, we are causing the troubles with that. We sorry about it. As we said right at the beginning, it's already reported in the media, a company called Nexperia. The chips from the company has been stopped, suspended, therefore we have a impact on the procurement. We work together with the Tier 1 manufacturers to try to minimize the impact on the production.

Naoko Ukita: In North America, there is this impact in reality. What is the prospect for the procurement? Do you think the situation will improve or getting worse? Do you have a risk of such, please tell us.

Speaker #1: Do you have a risk of such ? Please tell us . I will answer the question then . So for the semiconductors , for the customers , suppliers , we are causing the troubles with that we .

Noriya Kaihara: I will answer the question then. For the semiconductors, for the customers, suppliers, we are causing the troubles with that. We sorry about it. As we said right at the beginning, it's already reported in the media, a company called Nexperia. The chips from the company has been stopped, suspended, therefore we have a impact on the procurement. We work together with the Tier 1 manufacturers to try to minimize the impact on the production.

Speaker #1: Sorry about it . As we said right at the beginning , it's already reported in the media company called next year . The chips from the company has been stopped suspended .

Speaker #1: Therefore, we have an impact on the procurement, and then we work together with the Tier One manufacturers to try to minimize the impact on production.

Speaker #1: And the 27th of October in the production plant in the North America , we adjusting the production situation today . So as of now , we have the impact of 110,000 units .

Noriya Kaihara: As of the 27 October in the production plant in North America, we are adjusting the production situation today. As of now, we have a impact of 110,000 units that's reflected. I said 250, operating a profit of JPY 150 billion that is put up in this announcement today. I heard that shipment has resumed in China now. We have already started our communications to the suppliers. We are trying our best so that we can get supplies of those chips as much as we can.

Speaker #1: That's reflected. And then I said $250 billion, but operating profit of $150 billion. That is put up in this announcement today.

Speaker #1: And I heard that shipment has resumed in China . Now . And we have already started our communications to the suppliers . And we are trying our best so that we can get supplies of those chips as much as we can .

Speaker #1: And going forward , it is a difficult to tell definitively . But as of now . In the week of the 21st of November , probably in that week , we wish to resume our production eventually and we are trying to achieve that now .

Noriya Kaihara: Going forward, it is difficult to tell definitively, but as of now, in the week of 21 November, probably in that week, we wish to resume our production eventually, and we are trying to achieve that now. As of today, the parts, those chips are coming up now, back in the network. It is getting better, and we are seeing some signs. However, it is not definitive as of yet, so we try to stay communicating with the suppliers very closely so that we can try our best to resume. That is the situation today. Thank you. Thank you. Thank you to Miss Ukita as well. We'd like to take the next question.

Speaker #1: And as of today, the parts those chips are coming up now, back in the network, and then it is getting better, and we are seeing some signs.

Speaker #1: However, it is not definitive as of yet, so we try to stay in communication with the suppliers very closely so that we can do our best to resume.

Speaker #1: And that is the situation today . Thank you . Thank you , thank you , to Miss Uchida as well . We'd like to take the next question from Nikkei newspaper .

Naoko Ukita: Thank you.

Operator: Thank you to Miss Ukita as well. We'd like to take the next question.

Noriya Kaihara: From Nikkei Newspaper, Mr. Okinaga, please. This is Okinaga from Nikkei Newspaper. Thank you very much. The impact from next period, I'd like to ask another follow-up question. Why has Honda suffered such a big damage? You said that you hope to start production on the week of 21 November, but have you considered procuring alternative parts? Do you think that the impact should not go beyond JPY 150 billion? Okay. Thank you very much, Mr. Okinaga. First of all, the reason why we have this much impact is that this time the components, well, I cannot give you any details about the component, but the component was sourced from one supplier. That was one major factor.

Operator: From Nikkei Newspaper, Mr. Okinaga, please.

Speaker #1: Mr. Okinaga , please . This is Okinaga from Nikkei newspaper . Thank you very much for the impact from next period . I'd like to ask another follow up question .

Shoya Okinaga: This is Okinaga from Nikkei Newspaper. Thank you very much. The impact from next period, I'd like to ask another follow-up question. Why has Honda suffered such a big damage? You said that you hope to start production on the week of 21 November, but have you considered procuring alternative parts? Do you think that the impact should not go beyond JPY 150 billion?

Speaker #1: So for Honda has suffered , why has Honda suffered such a big damage ? And then you said that you hope to start production on the week of November 21st , but have you considered procuring alternative parts ?

Speaker #1: So any do you think that the the impact should not go beyond ¥150 billion ? Okay . Thank you very much . Mr. Okinaga .

Noriya Kaihara: Okay. Thank you very much, Mr. Okinaga. First of all, the reason why we have this much impact is that this time the components, well, I cannot give you any details about the component, but the component was sourced from one supplier. That was one major factor.

Speaker #1: First of all , so the reason why we are have this much impact is that this time the components well , I cannot give you any details about the component , but the the components was a sourced from one supplier .

Speaker #1: That was one major factor. And another thing is, in the past for semiconductors, yes, we have had some impacts such as this.

Noriya Kaihara: Another thing is, in the past, for semiconductor, yes, we have had some impacts such as this. We have worked together with the supplier to hold a kind of interim inventory or appropriate inventory level. We asked them to hold that. That's so, that has happened. However, it was single source. Also in North America, the sales have been going very well, we have been producing almost at a full capacity. In that sense, well, with the interim inventory was getting low as well. Because of that, the supplier was impacted. Promptly, that impact led to impact our production as well. For whether we are considering some alternative sourcing, of course, yes. We have considering alternative, let's say, products or off-the-shelf product.

Speaker #1: So we have worked together with the supplier to hold the kind of interim inventory or appropriate inventory level. We ask them to hold that.

Speaker #1: That's all that has happened. However, it was single sourced, and in North America, the sales have been going very well, to the point that we have been producing almost at full capacity.

Speaker #1: So in that sense . Well , with the interim inventory was getting low as well . So because of that , the supplier was impacted .

Speaker #1: Then promptly that impact led to impact our production as well . For whether we are considering some alternative sourcing . Of course . Yes , we have our considering alternative , let's say products off the shelf products .

Speaker #1: So to the extent we are able to find out , yes , we are using them . So at an early stage , as early stage as possible , we want to apply whatever we can utilize .

Noriya Kaihara: To the extent, we are able to find out, yes, we are using them. At an early stage, as early stage as possible, we want to apply whatever we can utilize. That is why sometime during that week of 21 November, we believe we should be able to resume production. For future supplies, in China, if in China, if they ever stop shipping, shipment again, we will never know the impact. Should that ever happen, if you are asking me is that going to be another impact, I cannot say for 100% sure, no. At this point in time, as far as we know from the intelligence that we have, we should be able to resume operation and by the date that I mentioned. That concludes my answer. Thank you very much. Thank you very much.

Speaker #1: So that is why sometime during that week of November 21st , we believe we should be able to resume production . So for future supplies in China , if in China , if they ever stop shipping shipment again , we will never know the impact .

Speaker #1: But should that ever happen , I if you ask me , is that going to be another impact ? I cannot say for 100% sure .

Speaker #1: No , but at this point in time , as far as we know , from the intelligence that we have , we should be able to resume our operation .

Speaker #1: And by the date that I mentioned , that concludes my answer . Thank you very much . Thank you very much . I will ask ask another question for you .

Shoya Okinaga: Thank you very much.

Noriya Kaihara: I would ask another question. For your, the reason for your downward revision, so at August, you said JPY 650 billion EV related one-time expenses. Was that, has this gotten better? For sales in North America, I think, is it difficult to raise prices in North America? You know, that turned out to be negative, so I just want to know the reason. You said that you want to bring down the gross profit, gross losses to zero, so I would like to ask about what you plan to do. Okay. Thank you very much for the second question. Let me try to answer that. For the EV related one-off on time expenses... Oh, sorry. First, the tariff impact.

Shoya Okinaga: I would ask another question. For your, the reason for your downward revision, so at August, you said JPY 650 billion EV related one-time expenses. Was that, has this gotten better? For sales in North America, I think, is it difficult to raise prices in North America? You know, that turned out to be negative, so I just want to know the reason. You said that you want to bring down the gross profit, gross losses to zero, so I would like to ask about what you plan to do.

Speaker #1: The reason for your downward revision . So at part August , you said ¥650 billion EV related one time expenses . Was that this ?

Speaker #1: Has this gotten better? And then for sales in North America, I think, is it difficult to raise prices in North America?

Speaker #1: So, you know that turned out to be negative. So, I just want to know the reason. And then you said that you want to bring down the gross profit and gross losses to zero.

Speaker #1: So I would like to ask about what you plan to do . Okay . Thank you very much for the second question . Let me try to answer that for the EV related one off one time expenses .

Noriya Kaihara: Okay. Thank you very much for the second question. Let me try to answer that. For the EV related one-off on time expenses... Oh, sorry. First, the tariff impact.

Speaker #1: Oh , sorry . First , the tariffs impact . Against the number that we gave you last time , we have been able to minimize the impact .

Noriya Kaihara: The against the number that we gave you last time, we have been able to minimize the impact. Therefore, for the our profitability, it is getting better. For the EV impact, we have put in some more amount. In that sense, the impact has become greater. For the price hikes in North America, initially for North America, we were assuming that we will be able to raise prices, and then we have been prepared for that. Price hike is, you know, it's nothing you can do easily by ourselves, so we need to evaluate the market situation. What has happened is that in North America, particularly in the US, other OEMs incentives have been getting higher, so the actual market selling price has not gone up in real terms.

Speaker #1: So therefore, for our profitability, it is getting better. And then for the EV impact, we have put in some more amounts.

Speaker #1: So, in that sense, the impact has become greater for the price hikes in North America. Initially, for North America, we were assuming that we would be able to raise prices.

Speaker #1: And then we had been prepared for that . However , price hikes is , you know , there's nothing you can do easily by ourselves .

Speaker #1: So we need to evaluate the market situation . What has happened is that in North America , particularly in the US , other OEMs , incentives have been getting higher .

Speaker #1: So the actual market selling price has not gone up in real terms . Therefore , of course , we have been we have done the annual price revisions .

Noriya Kaihara: Of course, we have done the annual price revision. However, looking at the other company's status, we found it difficult to raise prices due to the tariff's impact. We were not quite able to gain that positive impact due to the price hikes that we had anticipated at the very beginning. Unfortunately, that we cannot expect that. For the second half of this year as well, for the price hike, I don't think we can really expect good impacts to come from that at all. That completes my answer. Thank you very much.

Speaker #1: However , looking at the other companies status , we can we found it difficult to raise prices due to the tariffs impact . So we were not quite able to gain that positive impact due to the price hikes that we had anticipated at the very beginning .

Speaker #1: Unfortunately , that we cannot expect that . So second half of this year as well , for the price hike , I don't think we can really expect a good impact to come from that at all .

Speaker #1: That completes my answer . Thank you very much . So , Alex , play with those numbers . In addition . And then last time .

Eiji Fujimura: I'll explain with those numbers in addition. Last time, it, the gross, it's JPY 450 billion negative gross tariff impact and then JPY 100 billion recovery. JPY 350 billion net impact for tariff. This time, gross, JPY 385 billion. Actually, gross impact is less of JPY 685 billion. Recovery is about JPY 100 to 50 billion. Net impact is about JPY 335 billion. Eventually that is the net impact. The gross impact JPY 650 billion. Of course, we had an accurate understanding today, but for as much as JPY 500 billion, we have an export from Thailand or Asian countries to US. We were concerned about the possible recessionate impact over there.

Speaker #1: It's the gross. It's $450 billion negative gross tariff impact, and then $100 billion recoveries. So, $350 billion net impact for tariff.

Speaker #1: And then this time, gross is $385 billion. And actually, the gross impact is less than $635 million. And then recovery is about $100 million or $250 million.

Speaker #1: And net impact is about 335 billion . Eventually that is the net impact . And then the gross impact . 650 of course , we had a accurate understanding today , but for as much as 500 billion , we have a export from Thailand or Asian countries to us , and we were concerned about a possible recession and the impact over there .

Speaker #1: So we incorporated that in our expectation before. But now we released it. And that means we have a list of 650 from gross.

Eiji Fujimura: We incorporated that in our expectation before, but now we released it. That means, we have a less of JPY 650 from gross, then we have a net recovery from JPY 1,100 to JPY 650. Actually, in the automobile market, it is difficult to revise the prices. Therefore, we need to delete that part for those automobiles, and that is why we have those numbers.

Speaker #1: And then we have a net recovery from 100 to 650. Actually, in the automobile market, it is difficult to revise the prices.

Speaker #1: So therefore we need to delete that part for those who abuse. And that is why we have those numbers. Thank you very much.

Noriya Kaihara: Thank you very much, Mr. Okinaga. If you have questions, 2 questions, please tell us the 2 questions in sequence. Okay. We'll take the next question from Yasunaga-san from NHK. This is Yasunaga from NHK. Can you hear my voice? Yes. Thank you. Just 1 question because others have asked the same question for. In the Automobile Business, China and Asia, you had some declines, you said. In your company, you are very much struggling with your sales in China. That's the impression. There was a GT's launch timing has been postponed. I'd like to hear about the facts about it. What are you going to do? Where is the difficulty of the market?

Operator: Thank you very much, Mr. Okinaga. If you have questions, 2 questions, please tell us the 2 questions in sequence. Okay. We'll take the next question from Yasunaga-san from NHK.

Speaker #1: Mr. Okinaga .

Speaker #2: So if you have questions, if you have questions, see questions, please tell us two questions in sequence.

Speaker #1: Okay. We'll take the next question from our Iyasu-san from NHK.

Hiroshi Yasunaga: This is Yasunaga from NHK. Can you hear my voice? Yes. Thank you. Just 1 question because others have asked the same question for. In the Automobile Business, China and Asia, you had some declines, you said. In your company, you are very much struggling with your sales in China. That's the impression. There was a GT's launch timing has been postponed. I'd like to hear about the facts about it. What are you going to do? Where is the difficulty of the market?

Speaker #3: NHK .

Speaker #1: , this is Yasunaga from NHK. Can you hear my voice?

Speaker #3: Yes .

Speaker #1: Thank you. I just have one question because others have asked the same question regarding the automobile business in China and Asia. You had some declines.

Speaker #1: You said . But in your company you are very much struggling with your sales in China . That's the impression as so there was a launch timing has been postponed as unless you hear about the facts about it and then what are you going to do ?

Speaker #1: And then where is the difficulty of the market? So, I'd like to hear about that. Okay. Thank you very much.

Noriya Kaihara: I'd like to hear about that. Okay, thank you very much, Mr. Yasunaga. For the China market, let me try to answer that question. For Chinese market, overall market actually, because of the incentive has been reduced, the total market has been declining slightly. Basically, it's sideway movement. That's the total market. For this time, for Honda, particularly for ICE, the price discount has been staying at a high level, so we have been struggling a lot. In a sense, volume for money, we are behind others. We are aware of that. For BEV, B-E-V, so for the features, the NOA Navigate on Autopilot, that's not provided on our cars, so people consider our cars pricey.

Hiroshi Yasunaga: I'd like to hear about that.

Noriya Kaihara: Okay, thank you very much, Mr. Yasunaga. For the China market, let me try to answer that question. For Chinese market, overall market actually, because of the incentive has been reduced, the total market has been declining slightly. Basically, it's sideway movement. That's the total market. For this time, for Honda, particularly for ICE, the price discount has been staying at a high level, so we have been struggling a lot. In a sense, volume for money, we are behind others. We are aware of that. For BEV, B-E-V, so for the features, the NOA Navigate on Autopilot, that's not provided on our cars, so people consider our cars pricey.

Speaker #1: Mr. Yasunaga, for the China market. Let me try to answer that question. For the Chinese market overall, the market has actually been affected because the incentives have been reduced.

Speaker #1: So the total market has been declining as slightly . But basically it's sideway movement . That's a total market . And then for this time for Honda , particularly for ice .

Speaker #1: We well , the actually the price discount has been staying at a high level . So we have been struggling a lot . So in a sense volume for money .

Speaker #1: We are behind others . We are aware of that . And then for Bev , Bev . So for the features the NOAA navigation on Auto navigate on autopilot , that's not provided on our cars .

Speaker #1: So, people consider our cars to be pricey, and then other companies anticipate the momentum and offer similar products at a lower price.

Noriya Kaihara: Other companies put it, put the Momenta, and then offer it at a lower price. That is why it's difficult actually. That is the situation in China. For electric vehicle, as pointed out earlier, the e:N Series, the one, two, and three were in our horizon. But we felt the need to completely re-review this. We came up with a GT we had assumed. However, we did have to postpone it in reality. This will be, we were thinking of next year initially, for next fiscal year, sorry. However, we will, for the time being, I cannot tell you exactly when that's going to be, but we will postpone that.

Speaker #1: So that is why it's difficult actually . And then that is a situation in China . And then for electric vehicle , as pointed out earlier , the S series are the one , two and three were in a horizon .

Speaker #1: But we needed to we felt the need to complete the review . This . So we came up with a GT . We had assumed , however , we did have to postpone it .

Speaker #1: In reality , so this would be we were thinking of next year initially for next fiscal year . Sorry . However , we will for the time being .

Speaker #1: I cannot tell you exactly when that's going to be , but we will postpone that . And then from the planning stage as well , we need to consider right from the planning stage how we want to launch this model .

Noriya Kaihara: stage as well, we need to consider right from the planning stage how we want to launch this model. For electric vehicle, this current situation will continue for some time. Against that kind of business environment, for ICE, we need to make solid sales from those. Fortunately, we have the completed depreciation of all the factories. We need to enforce our business structure in the indirect, and also optimize our manpower, and do more precise sales prediction. We'll try to make our business more profitable. That is what we are doing right now, and this is all I can say for now. Thank you very much. Thank you very much, Mr. Yasunaga.

Speaker #1: So for electric vehicles, this current situation will continue for some time. And then against that kind of business environment for ICE, we need to make solid sales from those.

Speaker #1: Fortunately, we have completed the depreciation of all the factories. So, we need to reinforce our business structure in the indirect area and then also optimize our manpower.

Speaker #1: And then do more precise sales prediction, and then we'll try to make our business more profitable. That is what we are doing right now.

Speaker #1: And then, this is all I can say for now.

Speaker #4: Well .

Speaker #1: Thank you very much. Thank you very much, Mr. Yasunaga.

Operator: Thank you very much, Mr. Yasunaga.

Noriya Kaihara: Next question from Asahi Shimbun. Mr. Miura, please.

Operator: Next question from Asahi Shimbun. Mr. Miura, please.

Speaker #2: Next question from Asahi Shimbun . Mr. Miller , please . From Asahi newspaper . Thank you for explanation . And I have two questions .

Eiji Fujimura: Miura from Asahi Shimbun. Thank you for explanation. I have 2 questions. 1, in the motorcycle businesses, Vietnam, you had a decline of the businesses. They had restrictions on the like application vehicles. How much of those impact did you incorporate, do you incorporate in this statement? What is your action against it? Question 2 is about automobiles, about specifically EVs in China. You said that you're going to have a radical action. What is the reasons why you have a struggle in the Chinese market? What do you think is the cause for that?

Jumpei Miura: Miura from Asahi Shimbun. Thank you for explanation. I have 2 questions. 1, in the motorcycle businesses, Vietnam, you had a decline of the businesses. They had restrictions on the like application vehicles. How much of those impact did you incorporate, do you incorporate in this statement? What is your action against it? Question 2 is about automobiles, about specifically EVs in China. You said that you're going to have a radical action. What is the reasons why you have a struggle in the Chinese market? What do you think is the cause for that?

Speaker #2: One . In the motorcycle businesses , Vietnam . You had a decline of the air business season . Then they had a restrictions on the electrification vehicles .

Speaker #2: .

Speaker #1: And how much of that impact did you incorporate? Or do you incorporate in this statement? And then what is your action against it?

Speaker #1: And question two is about automobiles , about specifically EVs in China . And you said that you're going to have a radical action .

Speaker #1: And then, what are the reasons why you are struggling in the Chinese market? What do you think is the cause of that?

Noriya Kaihara: Mr. Miura, thank you for your question. To start with, Vietnam, in for motorcycles. In Vietnam, as you know, while it is not yet implemented in the market, however, ICE motorcycles now would be regulated, especially in the city area. When they say that they might apply these new regulations starting middle of the next year or so. With that in place, actually, when the announcement was made last summer, people started refraining their buying of the products. We were expecting some negative impact on the Vietnamese businesses. In October, we are seeing the businesses coming back slightly.

Speaker #1: Mr. mirror , thank you for your question . To start with , Vietnam in former motorcycles in Vietnam , as you know well , it is not yet implemented in the market .

Speaker #1: However, motorcycles now would be regulated, especially in the city area. And then what they said was that they might apply this new regulation starting in the middle of next year or so.

Speaker #1: However, with that in place, actually, when the announcement was made last summer, people started refraining from their buying of the production.

Speaker #1: Then we were expecting some negative impact on the Vietnamese businesses. However, in October we are seeing the businesses coming back slightly, and then probably other things that this regulation is still talk; only we don't know if that is practically to be applied in Vietnam.

Noriya Kaihara: Probably, the things that this regulation is just still a talk only. We don't know if that is practically to be applied or in Vietnam. For some time, probably a current model of the ICE-based vehicles will suffice. Of course, electrification will start some time later. From starting this year, we have already launched the two, ICON e: and CUV e:, those two electrified vehicles over there in Vietnam. Idea is to try to sell more of those EV over there. In Thailand, we have a plan to start a production of a new EV model, and we are thinking about accelerating the start of this model production.

Speaker #1: So for some time , probably a current model of the ice based vehicles will be suffice . And then of course , electrification will start some time later and then from starting this year , we have already launched the two .

Speaker #1: Icon E and C. Those two electric vehicles over there in Vietnam, and the idea is to try to sell more of those EVs over there. In Thailand, we have a plan to start production of a new EV model, and we are thinking about accelerating the start of this model's production.

Speaker #1: And sometime earlier next year , probably in March , April time next year , we would like to try to bring over this new EVs to Vietnam .

Noriya Kaihara: Some time earlier next year, probably in March, April time next year, we would like to try to bring over these new EVs to Vietnam. Even when they have the new regulations practically in place over there, we can offer the EV vehicles over there. This time, we are expecting unit volume be a little bit less. However, we have Brazil businesses and Thai businesses quite well, that will compensate for the situations in Vietnam. That is our motorcycle businesses in Vietnam. China EV. May I? Please. EVs in China, as we said earlier, basically, Ye series, they are new products over there.

Speaker #1: So even when they have their new regulations , practice practically in place over there , we can offer the EV vehicles over there , over there .

Speaker #1: So this time we are expecting our unit volume to be a little bit less. However, we have our Brazil and Thai businesses performing quite well, so that will compensate for the situation in Vietnam.

Speaker #1: So, that is a motorcycle. Businesses in Vietnam, China, and EV may.

Speaker #3: I .

Speaker #1: Please ? So it is in China as we said earlier , basically yes . Series the new products over there and looking at the vehicle incorporated to others , for instance , the price range , they are higher , more expensive than the other products , 150,000 Yuans of other products .

Eiji Fujimura: EVs in China, as we said earlier, basically, Ye series, they are new products over there.

Noriya Kaihara: Looking at the vehicle in comparison to others, for instance, the price range, they are higher, more expensive than the other products. CNY 150,000 of other products, whereas ours are CNY 200,000, Chinese RMB. Our product is not priced competitive so much. Also we have NOA, Navigate on Autopilot system. It's automated driving system, basically. The competitors' products have NOA, however, not on our product yet. Therefore, going forward, we will change the models going in the future, and we will try to do that earlier. The Momenta, the local autopilot system, could be obtained so that we can add this autopilot system to our products.

Eiji Fujimura: Looking at the vehicle in comparison to others, for instance, the price range, they are higher, more expensive than the other products. CNY 150,000 of other products, whereas ours are CNY 200,000, Chinese RMB. Our product is not priced competitive so much. Also we have NOA, Navigate on Autopilot system. It's automated driving system, basically. The competitors' products have NOA, however, not on our product yet. Therefore, going forward, we will change the models going in the future, and we will try to do that earlier. The Momenta, the local autopilot system, could be obtained so that we can add this autopilot system to our products.

Speaker #1: Whereas ours is ¥300,000 Chinese RMB, and our product is not very price competitive. Also, we do not have navigation on the autopilot system.

Speaker #1: This automated driving system , basically the competitors products have NOAA . However , not on our product yet . Therefore , going forward we will change the models going in the future and we will try to do that earlier .

Speaker #1: And the momentum for the local autopilot system could be obtained so that we can add this autopilot system to our.

Speaker #3: Products .

Speaker #1: During the event, we can strengthen the intelligence of the products and also improve cost competitiveness. We need to approach the current situation as we are trying to expand local procurement in China.

Noriya Kaihara: Doing so, we can strengthen the intelligence of the products and also cost competitiveness, we need to approach too. Currently, we are trying to expand the local procurement in China. That way we can improve the competitiveness of the product, and that is what we are trying. Thank you very much. Thank you. Thank you, Mr. Miura. Okay, the next question from Weekly Toyo Keizai, Yokoyama-san, please. This is Yokoyama from Toyo Keizai. Yes, we can hear you all right. Thank you. I have two questions as well. The first question. Your full year prospect with the impact from a semiconductor JPY 150, and then you have a JPY 450 profit, and then you are thinking of a JPY 550.

Eiji Fujimura: Doing so, we can strengthen the intelligence of the products and also cost competitiveness, we need to approach too. Currently, we are trying to expand the local procurement in China. That way we can improve the competitiveness of the product, and that is what we are trying. Thank you very much.

Speaker #1: That way, we can improve the competitiveness of the product, and that is what we are trying to achieve. Thank you very much.

Speaker #3: Thank you .

Jumpei Miura: Thank you.

Speaker #1: Thank you , Mr. Mirror . Okay . The next question . Next question from Toyo Keizai Weekly . Yokoyama San , please . This is Yokoyama from Toyo Keizai .

Operator: Thank you, Mr. Miura. Okay, the next question from Weekly Toyo Keizai, Yokoyama-san, please.

Yoshihiro Yokoyama: This is Yokoyama from Toyo Keizai.

Speaker #1: Yes . We can hear you . All right . Thank you . I have two questions as well . The first question , your full year prospects with the impact from a semiconductor 150 .

Operator: Yes, we can hear you all right.

Yoshihiro Yokoyama: Thank you. I have two questions as well. The first question. Your full year prospect with the impact from a semiconductor JPY 150, and then you have a JPY 450 profit, and then you are thinking of a JPY 550.

Speaker #1: And then you have a $450 profit, and then you are thinking of a $550. So, I guess you do have quite a plan for your profit to suffer in the second half.

Noriya Kaihara: I guess you do have quite a plan for your profit to suffer in the second half. Can you give me some numbers about what the factors why you see a lower profit for the second half? My second question is for the profitability in automobile business. Right now, for the Automobiles, the ICE ROS 8% is what you're thinking about for the ICE. For BEV, you're going to have your own battery, and then you start from 0 gross profit. When will it turn into profit? When would it? Also, do you have any additional measures to gain more profit?

Yoshihiro Yokoyama: I guess you do have quite a plan for your profit to suffer in the second half. Can you give me some numbers about what the factors why you see a lower profit for the second half? My second question is for the profitability in automobile business. Right now, for the Automobiles, the ICE ROS 8% is what you're thinking about for the ICE. For BEV, you're going to have your own battery, and then you start from 0 gross profit. When will it turn into profit? When would it? Also, do you have any additional measures to gain more profit?

Speaker #1: So, can you give me some numbers about what the factors are, and why you see a lower profit for the second half? And my second question is regarding the profitability in the automobile business.

Speaker #1: So right now for the automobiles , the IC , iOS 8% is what you're thinking about for the IC , for Bev , are you going to have your own battery and then you start from zero gross profit , but when will it turn into When when would it .

Speaker #1: And also , do you have any additional measures to gain more profits ? So , you know , I'm just I think it might be difficult sensitive whether you're going to get into the profit for the automobiles this year .

Noriya Kaihara: Well, you know, I'm just, I think it might be difficult, sensitive whether you're going to get into the profit for the Automobiles this year. I just want to know. First of all, thank you for the question, Yokoyama-san. For the difference between the first half and the second half, we have this, of course, well, this JPY 150 billion tariff impact that will continue in the second half as well. On the one-time expense, we have the BEV provision that was in the first half. Those would offset each other. Well, that's what we expected to do.

Yoshihiro Yokoyama: Well, you know, I'm just, I think it might be difficult, sensitive whether you're going to get into the profit for the Automobiles this year. I just want to know.

Speaker #1: So I just want to know , okay , so okay . First of all , okay . Thank you for the question . Yokoyama San .

Noriya Kaihara: First of all, thank you for the question, Yokoyama-san. For the difference between the first half and the second half, we have this, of course, well, this JPY 150 billion tariff impact that will continue in the second half as well. On the one-time expense, we have the BEV provision that was in the first half. Those would offset each other. Well, that's what we expected to do.

Speaker #1: For the the the difference between the first half and the second half , the . So we have this of course , will this 150 , ¥150 billion tariff impact that will continue in the second half as well .

Speaker #1: But on the one-time expense, we have the Bev provision that was in the first half. So those would offset each other.

Speaker #1: Well, that's what we expected to do. And then for the first half and the second half, there will be a negative impact of about ¥40 billion due to foreign exchange.

Noriya Kaihara: For the first half and the second half, there will be a negative of JPY 40 billion about the foreign exchange, and the rest will be the substantial substance portion. Maybe it's better to tell you the numbers. We have JPY 440, and it goes down to JPY 110. JPY 320 billion, that will be the difference between the first and the second half. Let me explain that first of all. As I said, with the semiconductor and the one-time expenses, those will offset each other. JPY 320, and then we take away JPY 40 for the impact, and then JPY 290 billion, that would be the actual substance difference.

Speaker #1: And the rest would be the substantial substance portion. Maybe it's better to tell you the numbers. We have 440, and it goes down to 110.

Speaker #1: So, $3 billion to $320 billion. That will be the difference between the first and the second half. So let me explain that.

Speaker #1: First of all . So as I said with the semiconductor and the one time expenses , those will offset the offset each other .

Speaker #1: And then, so $320 billion, and then we take away $40 billion for the impact. And then $290 billion. That would be the actual substance difference.

Speaker #1: So, concerning this difference between the first half and the second half, as you can imagine, there is a difference in the expenses and R&D between the first and second halves.

Noriya Kaihara: Concerning this difference between first half and second half, as you can imagine, the expenses and R&D, there is a difference between the first and the second half. I hope you can see that, which is Japan. For quality related issues, based on the sales base, there's a bit of a difference in calculation. Anyway, those are mainly those numbers. Incentives. When it comes to incentive, we have just a negative of 110,000 units decline in North America. We don't know how we're going to use this incentive. Going by the original expected volume for North America, if we were able to keep the original target, however, maybe we need to increase the incentive a little bit.

Speaker #1: I hope you can see that which is . And then for quality related issues . Based on the sales base , there is a bit of a difference in calculation .

Speaker #1: But anyway, those are mainly the numbers related to incentives. When it comes to incentives, we have seen a negative decline of 110,000 units in North America.

Speaker #1: We don't know what how are we going to use this incentive . But . Going by the original expected volume for North America , if we were able to keep the original target , however , maybe we need to increase the incentive a little bit .

Speaker #1: But now that accounts for the difference between the first half and the second half. We have not really decided. We have not.

Noriya Kaihara: Now, that will account for the difference between the first half and the second half. We have not really decided. We need to discuss with American Honda how we're going to make those work actually. Okay. That's all for the numbers. Thank you. Okay. Let me try to answer the rest about the EV, the gross profit for EV. For North America, that's the assumption for the answering my question. This year we do have losses. We have JPY 650 billion. We have that. This includes one-time expenses as well. Next business year, I think we'll start from JPY 400 billion range level, that level.

Speaker #1: We need to discuss with American Honda how we are going to make those work. Actually, okay, that's all for the numbers.

Yoshihiro Yokoyama: Okay. That's all for the numbers. Thank you.

Speaker #1: Thank you. Okay. And then let me try to answer the rest about the EV. Are they gross profit for EV for North America?

Eiji Fujimura: Okay. Let me try to answer the rest about the EV, the gross profit for EV. For North America, that's the assumption for the answering my question. This year we do have losses. We have JPY 650 billion. We have that. This includes one-time expenses as well. Next business year, I think we'll start from JPY 400 billion range level, that level.

Speaker #1: That's the assumption for the answering my question . So this year we do have a losses . We have a 650 billion . We have that .

Speaker #1: So, this includes one-time expenses as well. So next business year, I think we'll start from a ¥400 billion range level.

Speaker #1: That level. And then from there, of course, we won't have the IRA subsidy. So the business environment is very, very challenging.

Noriya Kaihara: From there, of course, we won't have the IRA subsidy, so the business environment is very, very challenging. Because of that, we cannot be pursuing a far larger sales volume. However, we do have good prospect for the supply from GM. Now we'll have a more and more BEV of that, of our own development. Now we need to think about focus on how to reduce the manufacturing costs for own BEV. Also, it's important to consider whether we can produce at a very efficient rate. With those efforts, we need to minimize the losses to the best we can.

Eiji Fujimura: From there, of course, we won't have the IRA subsidy, so the business environment is very, very challenging. Because of that, we cannot be pursuing a far larger sales volume. However, we do have good prospect for the supply from GM. Now we'll have a more and more BEV of that, of our own development. Now we need to think about focus on how to reduce the manufacturing costs for own BEV. Also, it's important to consider whether we can produce at a very efficient rate. With those efforts, we need to minimize the losses to the best we can.

Speaker #1: So because of that , we cannot be pursuing a far larger sales volume . However , the we have have we do have a good prospects for the the supply from GM .

Speaker #1: So now we will have a more and more Bev of that of our own development . So we so now we need to think about focus on how to reduce the manufacturing costs for Bev .

Speaker #1: And then also it's important to consider whether we can produce at a very efficient way . And then with those efforts , we need to minimize the losses to the best we can .

Speaker #1: However, looking at the market, it's very difficult to read how the market would move, so it's the beginning of a mass production.

Noriya Kaihara: However, looking at the market, it's very difficult to read how the market would move. At the very, very beginning of mass production, of course, the burden of a fixed cost will be heavy. We just need to work on how best we can flexibly produce, reduce costs and so as to enhance or improve our profitability. If you're asking me when, I guess all I can say is that as soon as we can, we want to make it to profit. Thank you.

Eiji Fujimura: However, looking at the market, it's very difficult to read how the market would move. At the very, very beginning of mass production, of course, the burden of a fixed cost will be heavy. We just need to work on how best we can flexibly produce, reduce costs and so as to enhance or improve our profitability. If you're asking me when, I guess all I can say is that as soon as we can, we want to make it to profit. Thank you.

Speaker #1: Of course, the burden of a fixed cost will be heavy, so we just need to work on how best we can flexibly produce to reduce costs so as to enhance or improve our profitability.

Speaker #1: If you ask me, when I guess, all I can say is that as soon as we can, we want to make it to profit.

Speaker #1: Thank you . So the mobile business is this time . Do you have any disclosure for the expectations ? The year , profit or losses ?

[Journalist/Reporter] (Asahi Shimbun): The automobile businesses this time, do you have any disclosure for the expectations, the year's profit or losses?

Yoshihiro Yokoyama: The automobile businesses this time, do you have any disclosure for the expectations, the year's profit or losses?

Speaker #1: So we do not disclose, as per our protector levels, $550 billion. And you have to subtract from that level. So for the motorcycles, it will be about $600 to $700 billion.

Noriya Kaihara: We do not disclose as per our production levels, JPY 550 billion, and you have to subtract from that level. For the Motorcycles, it will be about JPY 600 to 700 billion, same as last year, and JPY 300 billion for Financial Services, that's like last year. They're both together, we would earn JPY 1 trillion. We said that, you could actually assume from that. For the Automobiles, we would end up in losses, but for EV at one time JPY 250 billion put up, and also chips, one time JPY 150 billion again. Both together are JPY 400 billion negative altogether, plus.

Eiji Fujimura: We do not disclose as per our production levels, JPY 550 billion, and you have to subtract from that level. For the Motorcycles, it will be about JPY 600 to 700 billion, same as last year, and JPY 300 billion for Financial Services, that's like last year. They're both together, we would earn JPY 1 trillion. We said that, you could actually assume from that. For the Automobiles, we would end up in losses, but for EV at one time JPY 250 billion put up, and also chips, one time JPY 150 billion again. Both together are JPY 400 billion negative altogether, plus.

Speaker #1: Same as last year . And 300 billion for finance . Last last year . And they both together we would earn ¥1 trillion .

Speaker #1: We said that. And then you could actually assume from that for the automobiles. We would end up in losses. And but EV, at one time, $250 billion put up and also chips.

Speaker #1: One time 150 billion again both together are 400 billion negative altogether plus . This time this time we have a tariff impact as well on the top .

Noriya Kaihara: This time, this term, we have a tariff impact as well on the top. The number will be including all those factors. As we said before, we need to earn money, revenue based on ICE, and losses coming from the BEV should be controlled better and not just P&L. We have to look into the spending out of the cash flow. We have to control the timeline of our spending too. That is how we like to manage.

Eiji Fujimura: This time, this term, we have a tariff impact as well on the top. The number will be including all those factors. As we said before, we need to earn money, revenue based on ICE, and losses coming from the BEV should be controlled better and not just P&L. We have to look into the spending out of the cash flow. We have to control the timeline of our spending too. That is how we like to manage.

Speaker #1: So the number will be including all those factors. And then, as we said before, we need to earn revenue based on ICE, and losses coming from the BEV should be controlled better and not just PL.

Speaker #1: We have to look into the spending out of the cash flow. We have to control the timeline of spending too, so that is how we like to manage.

Speaker #1: Thank you very much . This is all thank you . Thank you very much , Mr. Yokoyama . I do see a lot of hands raised , but due to the time restriction , we like to make the next question .

[Journalist/Reporter] (Asahi Shimbun): Thank you very much. This is all. Thank you.

Yoshihiro Yokoyama: Thank you very much. This is all. Thank you.

Noriya Kaihara: Thank you very much, Mr. Yokoyama. I do see a lot of hands raised, due to the time restriction, we'd like to make the next question the last. From TV Tokyo, Ms. Nagai, can you hear me? Yes, we can hear you. Thank you. 1 question. For the this year's, this fiscal year's forecast, 3 months ago, you revised upward, this time you're revising downward. When you make the forecast, I just want to know about the approach. Are you being very conservative? The second is your forecast for the unit sales for, I think you cover a lot of China, excluding China, for other ASEAN markets, I think there's a bit of a decline.

Operator: Thank you very much, Mr. Yokoyama. I do see a lot of hands raised, due to the time restriction, we'd like to make the next question the last.

Speaker #1: The last from TV . TV Tokyo . Miss Nagaya , can you hear me ? Yes , we can hear you . Thank you .

[Analyst] (Tokyo TV): From TV Tokyo, Ms. Nagai, can you hear me?

Operator: Yes, we can hear you.

[Analyst] (Tokyo TV): Thank you. 1 question. For the this year's, this fiscal year's forecast, 3 months ago, you revised upward, this time you're revising downward. When you make the forecast, I just want to know about the approach. Are you being very conservative? The second is your forecast for the unit sales for, I think you cover a lot of China, excluding China, for other ASEAN markets, I think there's a bit of a decline.

Speaker #1: One question for the fiscal year. This year's forecast is revised downward. Three months ago, you revised it upward, but this time you are revising it downward.

Speaker #1: So when you make the forecast , are you . I just want to know about the approach . Are you being very conservative .

Speaker #1: The second is our forecast for the unit sales for, I think you cover a lot of China, but excluding China for other ASEAN markets.

Speaker #1: I think there's a bit of a decline compared to three months ago. You know, we are struggling in Asia so much.

Noriya Kaihara: Compared to three months ago, you know, we are struggling in Asia so much. What's the reason? What are the factors?

[Analyst] (Tokyo TV): Compared to three months ago, you know, we are struggling in Asia so much. What's the reason? What are the factors?

Speaker #1: What is the reason? What are the factors? Thank you very much for your question, Miss Nagai. So, how do we protect our plans?

Eiji Fujimura: Thank you very much for your question, Mr. Nagai. How to put up our plans. I wouldn't say we are conservative at putting together those plans because usually the idea is that the transparency is our focus. Whatever we get to know, we try to incorporate in those explanation to give you the explanation. Tariff issue, for instance, we would have those the alleviation of tariff impact and then calculating all those returns, refunds, we would have those that much of a refund included. These are the well-calculated impact. Exchange rate Forex for the JPY 70 billion plus, we include that too.

Speaker #1: So I wouldn't say we are conservative putting together those plans because usually the idea is that the transparency is our focus . So whatever we get to know , we try to incorporate in those explanation to give you the explanation and then tariff issue , for instance , we would have those the , the alleviation of tariff impact .

Speaker #1: And then, calculating all those returns and refunds, we would have that much in refunds included. And then these are the well-calculated impacts and the exchange rate.

Speaker #1: Forex for the ¥70 billion plus. We include that too. And the chips, that is an extra one that is a bit of a special one.

Eiji Fujimura: The chips, that is extra one, that is a bit of a special one. JPY 50 billion tariff impact, that is included, as we said. Plans are put together based on the principle like that. It is not always conservative. Please be acknowledged about it. The forecast of the unit sales in ASEAN regions. The decline of the unit sales is a bit significant as what you said is quite right. Because in ASEAN region, the unit sales, the volume is expected to be down a bit. 750,000 units less. It is a significant reduction as compared to the first forecast. Especially Indonesia, Thailand, in those countries or Malaysia as well.

Speaker #1: But the $550 billion tariff impact that is included, as we said, and plans are put together based on the principle that it is not always conservative.

Speaker #1: Please . We acknowledged about it and then the forecast of the unit sales in as regions , the decline of the unit sales is a bit significant as what you said is quite right , because in Asean region , the unit sales , the volume is expected to be down a bit .

Speaker #1: 750,000 units less . So it is a significant reduction as compared to the first forecast . And then especially Indonesia , Thailand , in those countries or Malaysia as well .

Eiji Fujimura: There are the governmental policies to be looked at also. Also the market is a bit shrinking too, because of which we have expected the reduction of the volume in Thailand. The competitors, competition is something that accounts for the situation too. For instance, the selling prices, we are losing price competitiveness against the others. Sales are stagnant, and we need to react and take actions against the situation, especially in Asian countries. We need to have a radical re measures against it. From this term, next term, next year, we do not have a new launch models. Big minor change of the City. That's one thing I can share with you.

Speaker #1: There are the the governmental policies to be looked at also , and also the market is a bit shrinking too , because of which we have expected the reduction of the volume in Thailand , the competitors are competition is something that accounts for the situation to , for instance , selling prices .

Speaker #1: We are losing a price competitiveness against the others and so cells are stagnant and we need to react and take actions against this situation , especially in Asian countries .

Speaker #1: We need to have a radical measures against it . And then from this term , next term , next year , we do not have a new launch models , big minor change of the city .

Speaker #1: That's one thing I can share with you. And then the big minor change in the city, the timing of that could be kind of an opportunity to take advantage of for us to give a kick to the market.

Eiji Fujimura: The big minor change of the City, the timing of that could be a kind of opportunity to take advantage of for us to give a kick to the Asian market. Nevertheless, the Asian market is tough and because of that, we decided to now revise our expectations. Again, the conservativeness about the volume expectations, it is rather a solid, conservative number, I thought. You mentioned about the competition of the competitors. Would that include the Chinese supplier? That is always the case. Is that right? In terms of the volume of the sales, this is the number that we will commit to achieve. That is how we set up this volume.

Speaker #1: But nevertheless , the Asian market is a tough . And because of that , we decided to revise our expectations and then again , the conservativeness about a volume expectations .

Speaker #1: It is a rather a solid conservative number , I thought , and also you mentioned about the composition of the competitors that include the Chinese supplier .

Speaker #1: That is always the case. Is that right? So in terms of the volume of the sales, this is the number that we will commit to achieve.

Speaker #1: That is how we set up this volume . And about the competitors , of course , the Chinese suppliers are there accounts as well .

Eiji Fujimura: About the competitors, of course, the Chinese suppliers, their accounts as well. In Asian markets, there are emerging Chinese products coming in. Against them, the existing manufacturers are providing more incentives. Prices are kind of discounted against the Chinese. That is making the situation more competitive in terms of the prices. That is the air market situation over there. Thank you very much. Thank you, Ms. Nagai. Okay, thank you very much. We'd like to close now the financial results briefing. The material is listed on our website, so please refer to it. Thank you very much for your participation. Thank you very much.

Speaker #1: But in Asian markets, there are emerging Chinese products coming in, and against them, the existing manufacturers are providing more incentives. Prices are kind of discounted against the Chinese.

Speaker #1: And then that is making the situation more competitive in terms of the prices. That is the market situation over there. Thank you very much.

Speaker #1: Thank you . Miss Nagai . Okay . Thank you very much . I would like to close now the financial results briefing , the material will be is listed on our website .

Operator: Thank you, Ms. Nagai.

Noriya Kaihara: Okay, thank you very much. We'd like to close now the financial results briefing. The material is listed on our website, so please refer to it. Thank you very much for your participation.

Operator: Thank you very much.

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