Honda Motor Q3 2026 Honda Motor Co Ltd Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2026 Honda Motor Co Ltd Earnings Call
Operator: 本日はお忙しい中ご参加いただき。
Noriya Kaihara: Thank you very much for taking time out of your busy schedule to attend our briefing today. We would now like to start Honda Motor Co., Ltd.'s financial results briefing for Q3 of the fiscal year to March 2026. First of all, allow me to introduce the attendees today. Mr. Noriya Kaihara, Director, Executive Vice President, and Representative Executive Officer. Good to see you, everyone. We have Mr. Eiji Fujimura, Director, Managing Executive Officer.
Eiji Fujimura: Thank you.
Noriya Kaihara: Mr. Masao Kawaguchi, Operating Executive, Head of Accounting and Finance Unit. This is Kawaguchi. Good to see you, everyone. Mr. Kaihara will first present the financial results of Q3 ended December 2025 and forecast of consolidated results for the fiscal year ending in March 2026. Then Mr. Fujimura will present the details. Over to you, Mr. Kaihara. Thank you. 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 Q3 of fiscal year to March 2026. I would like to start with the highlights of the financial results. Our operating profit for the Q3 of the year to March 2026 was JPY 591.5 billion. Motorcycle operations saw solid global unit sales led by India and Brazil.
Noriya Kaihara: In addition, the restriction on ICE vehicles in Vietnam, which was a concern, had only limited impact to sales compared to our assumption. For results up to Q3, we've attained the record high unit sales, operating profit, and operating margin. Automobile operations saw declines in profit due to non-recurring expenses related to EV, in addition to impact from tariffs. Operating cash flow after R&D adjustment, which indicates the resource available for future investment, came to JPY 1,855.8 billion, generating cash on par with the same period last year. The forecast for the consolidated results for the term ending in March 2026 is operating profit of JPY 550 billion and profit for the year of JPY 300 billion, unchanged from the previous forecast.
Noriya Kaihara: Impact from tariffs was initially forecast at JPY 450 billion at the beginning of the term, but our prospects are now that it would be reduced to JPY 310 billion. Toward the end of the term, though we expect growth in profit due to yen depreciation, the competitive environment for automobiles in Asia will intensify, requiring incentives. Taking into consideration uncertain business environments, we are maintaining the previous forecast. Going by business segments, for motorcycle operations, with the tailwind of solid sales in India and Brazil, we continue to aim for 21.3 million units, the highest record sales. For automobiles, we will maintain the forecast of 3.34 million units, unchanged from last forecast. The shortage of semiconductor supply experienced in Q3 now has good prospects for preventing recurrence.
Automobile operations saw declines in profit due to non-recurring expenses related to the EV, in addition to impact from tariffs. Operating cash flow after R&D adjustment—which indicates the resources available for future investments—came to ¥1 trillion 855.8 billion, generating cash on a par with the same period last year. The forecast for the consolidated results for the term ending in March 26 is operating profit of ¥550 billion and profit for the year of ¥300 billion and change from the—
Previous forecast impact from terrorists was initially forecast at ¥450 billion at the beginning of the term, but our prospects are now that it would be reduced to ¥310 billion. Toward the end of the term, though, we expect growth in profit due to yen depreciation. The competitive environment for automobiles in Asia will intensify, requiring incentives to be taken into consideration and certain business environment. We are maintaining the previous forecast.
Noriya Kaihara: On the other hand, we are beginning to see signs of supply risk for other materials such as rare earth metals and memories, and we will closely monitor the situation and take actions as needed. To give you the consolidated results for the Q3 of the year to March 2026, operating profit was JPY 591.0 billion, lower by JPY 548.4 billion compared to the same period last year. Investment earnings due to the equity method was JPY 24.0 billion, higher by JPY 51.3 billion. The quarter profit attributable to the owner of the parent was JPY 465.4 billion, lower by JPY 339.8 billion. Next, I'd like to cover the forecast for the consolidated results for the term ending in March 2026.
Going by business segments, for motorcycle operations, with the tailwind of solid sales in India and Brazil, we continue to aim for 21.3 million units—the highest record sales for automobiles. We will remain the maintained, the forecast of 3.34 million units and change from last forecast, the shortage of semiconductor supply experience. And third quarter now has good prospects for preventing recurrence. On the other hand, we are beginning to see signs—signs of, sorry, supply risk for other materials such as rare earth metals and memories. And we will closely monitor the situation and take actions as needed.
To give you the consolidated results for the third quarter of the year to March 26th, uh, operating profit, uh, was, uh, 591 billion yen, lower by 548.4 billion compared to the same period last year. Investment earnings due to the equity method was 24.0 billion, higher by 51.3 billion. And the quarter profit attributable to the owner of the parent was 465.4 billion, lower by 339.88 billion.
Noriya Kaihara: Compared to the previous forecast, we maintain our forecast of operating profit of JPY 550 billion, and then the profit of the year attributable to the owner of the parent of JPY 300 billion, which is unchanged. The exchange rate against the US dollar is assumed at 140 JPY for the four-year period. Next, for shareholder returns, forecast for the four-year dividend for the fiscal year ending in March 2026 is 70 JPY per share, unchanged from the previously published forecast. In addition, the board of directors meeting held today has resolved on cancellation of treasury stocks. We will execute cancellation of 747 million treasury stocks.
The exchange rate against the US dollar is assumed to be 140 yen, 140 yen for the four-year period.
Uh, next, for shareholder returns, the forecast for the full-year dividend for the fiscal year ending in March 2026 is 70 yen per share, and this has changed from the previously published forecast. In addition, the Board of Directors meeting held today has resolved on the cancellation of treasury stocks.
We will execute cancellation of 747 million treasury stocks.
Masao Kawaguchi: So let me explain about the details of the financial performance, and Mr. Fujimura is going to explain. Let me start. So regarding cumulative group unit sales for three months up to Q3 year-on-year, for motorcycles, 16.44 million units sold due to the increase in India, Pakistan, and Brazil. For automobiles, 2.561 million units due to decline in Asia, mainly in China. And for power products business, 2.507 million units sold due to some incremental sales in Europe and decline mainly in Asia. We have explained the consolidated performance up to Q3 already. Next, I will explain factors for changes of operating profit year-on-year. Operating profit was JPY 591.5 billion, down by JPY 548.4 billion year-on-year.
So let me explain about, uh, the, uh, details of the, uh, financial performance. And the MRR is going to explain. Let me start. So, uh, regarding cumulative group unit sales for 3 months up to the third quarter, year on year, for motorcycles, uh, 16.44 million units sold, uh, due to the increase in India, Pakistan, and Brazil,
For automobiles, uh, 2.561 million units due to decline in, uh, maybe in China.
And for the power production business, 2.57 million units were sold due to some incremental sales in Europe and a decline mainly in Asia.
We have explained the consolidated performance up to the quarter already.
Next.
Masao Kawaguchi: Factors behind the changes: sales made a positive impact by JPY 38.1 billion because of the increase in motorcycle unit sales, as well as in profit in financial businesses, though automobiles unit sales declined due to the shortage of semiconductor supplies. Price and cost impact were positive by JPY 225.9 billion due to effective price revisions. Expenses impact was negative on profit by JPY 108.6 billion, R&D impact negative by JPY 35.7 billion. Foreign currency impact negative by JPY 111 billion. One-time EV-related expenses impact negative by JPY 267.1 billion, and the tariff impact squeezed the profit by JPY 289.8 billion. Excluding one-time EV-related expenses and the tariff impact, the operating profit would be JPY 1,148.5 billion.
I will explain factors for changes of property, uh, for operating profit year on year. Operating profit was, uh, ¥5,091.5 billion, down by ¥548.4 billion year on year; factors behind for changes.
Sales, uh, made a positive impact, uh, by ¥308.1 billion because of the increase in motorcycle unit sales as well as in a profit in financial, uh, businesses. Though, what we build, unit sales, uh, declined due to, uh, the shortage of semiconductor supplies. Price and cost impact, uh, were positive, uh, by ¥225.9 billion due to effective price revisions.
Expenses impact was a negative on profit by ¥108.6 billion around the impact, and negative by ¥35.7 billion.
Foreign currency impact negative, by 10011 billion. Uh 1 time, it be related expenses impact negative by 267.11 billion and the Tariff impact squeezed. Uh The Prophet by uh 289.8 billion. Again, excluding 1-time EV related expenses and the Tariff impact the operating profit uh, will be once with your
Masao Kawaguchi: Regarding operating profit by business segments, motorcycle businesses JPY 446.5 billion operating profit, automobile businesses JPY 166.4 billion losses, financial service businesses JPY 218 billion profit, and the power products and other businesses JPY 6.5 billion losses. Operating profit of motorcycle business increased by JPY 44.8 billion year-on-year due to market JPY 546.5 billion. Factors for changes: sales impact was positive by JPY 61.2 billion due to incremental sales units mainly in Asia and South America. Price cost impact were positive by JPY 48.6 billion due to effective price revisions and so on. Expenses impact negative by JPY 24.1 billion. R&D impact was positive by JPY 4.6 billion. Foreign currency impact negative by JPY 37.7 billion, and tariff impact negative by JPY 7.7 billion. Operating profit of automobile business went down by JPY 569 billion year-on-year, resulting in the operating losses of JPY 166.4 billion.
And 145, uh, 148.5 billion yen regarding operating profit by business segments. Motorcycle businesses, 446.5 billion yen operating profit, or it will be a businesses. Uh, 1,566.4 million yen losses. Financial services business is 218 billion yen profit. And the power production business is 6.5 billion yen losses.
Operating profit of motorcycle, business increased by 44.8 billion. Yen, a year on year, uh, due to Mark, 4 546.5, billion yen, factors for changes
Sales impact was a positive to ¥61.2 billion due to incremental sales units, mainly in Asia and South America.
Price cost impacts were positive by ¥48.6 billion, due to effective price revisions and so on.
Masao Kawaguchi: Breakdown of factors for changes: sales had a negative impact by JPY 82.8 billion due to unit sales decline, mainly due to semiconductor supply shortage, losses associated with the reorganizing of the affiliated company of the group, and so on. Price and cost impact had a positive impact by JPY 177.3 billion due to effective price revisions. Expenses had a negative impact by JPY 11.7 billion. R&D impact negative by JPY 42.1 billion. Foreign currency impact negative by JPY 62.9 billion. One-time EV-related expenses had a negative impact by JPY 267.1 billion, and the tariff impact was negative by JPY 279.5 billion. Cash flow situations now: free cash flows, excluding financial service businesses, was JPY 917.4 billion. Net cash as of the end of Q3 was JPY 3,170.7 billion, and the operating cash flows after R&D adjustment was JPY 1,855.8 billion.
Expenses impact negative by 24.1 billion R&D impact was a positive by, uh, 4.6 billion yen. Foreign currency impact negative, by 37.7 billion, and a tariff impact negative by, uh, 7.7 billion yen, operating profit of about mobile business, went down by 569 billion a year, on year, resulting in their particular losses of 166.4 billion, yen breakdown of factors for changes.
Sales had a negative impact of ¥82.8 billion due to unit sales decline, mainly due to semiconductor supply shortage, losses associated with reorganizing the affiliated company of the group, and so on.
A price and cost impact has had a positive impact of ¥177.3 billion due to effective price revisions.
Expenses had a negative impact of $11.7 billion, around the negative impact of $42.1 billion.
$9 billion, uh, one time. Uh, if we related the expenses, had a negative impact by $267.1 billion, and the tariff impact was negative by $179.5 billion—cash flow situations. Now,
Free cash flow, excluding the financial services business, was ¥917.4 billion.
Masao Kawaguchi: Let me explain the consolidated forecast for FY ending March 2026. Regarding group unit sales, we will keep the previous forecast of 21.3 million units of motorcycles, 3.34 million units for automobiles, and 3.67 million units for power products volume. We have already explained the consolidated financial forecast for FYE March 2026. As for factors for changes in operating profit year-on-year, for those forecasts, operating profit would be down by JPY 663.4 billion year-on-year. With factors for changes, sales would have a negative impact by JPY 162 billion due to semiconductor supply shortage and so on. Price cost impact will be positive by JPY 330 billion due to effective price revisions and so on. Expenses impact JPY 106.5 billion negative. R&D impact JPY 166 billion negative. Foreign currency impact JPY 149 billion negative, and the tariff impact negative by JPY 310 billion.
The as of the end of the quarter was at 3 trillion and 170 billion, and the operating cash flows. After earned, the adjustment was the once per video under 8, 5, 5.8.
Let me explain the consolidated forecast for the full year and for March 2026.
Reading group in sales, we will keep previous for rest of, uh, uh, 21.3 million units of motorcycles at 3.334 million units for motorcycles—automobiles, excuse me—and 3.67 million units for Power Products volume.
And, uh, we have already explained, uh, the consolidated, the financial forecast for FYE March 2026. As for the factors for changes in operating profit year on year for those forecasts.
Operating profit would be down by ¥663.4 billion year-on-year with factors for changes.
Masao Kawaguchi: Regarding factors for changes in the forecast of the operating profits, we will keep the previous forecast of the operating profit, for which sales impact will be negative by JPY 10 billion. Expenses impact negative by JPY 15 billion. R&D expenses impact negative by JPY 40 billion. Foreign currency will make a positive impact by JPY 65 billion yen due to the change of the exchange rate assumption to 148 yen for dollar. Expected capital expenditures, depreciation, amortization, and R&D spending of FYE March 2026 will be as follows, reflecting increase in CapEx for acquisition of factory buildings and so on of the battery production JV with LG Energy Solution. Lastly, I would like to speak about the future direction of our operations in view of the current business environment.
Sales would have a negative impact by 162 billion, due to semiconductor Supply which uh shortage. And so on a price cost impact will be a positive uh by uh 330 billion due to effective, press revisions, and so, on expenses impact 106.5 billion yen, decade around the impact. 166 billion negative. Foreign currency impact for 10049 billion yen negative, and the Tariff impact negative by 310 billion yen.
Regarding factors for changes in the forecast of the operating profits.
We will keep the previous focus of the operating profit, uh, for which, uh, sales impact, uh, will be, uh, negative by ¥10 billion.
Expenses impact negative by ¥15 billion around the expenses, uh, impact negative by ¥40 billion, and foreign currency will make a positive impact by ¥65 billion, due to the change of the exchange rate assumption to 148 in year 4.
expected of capital expenditures, uh, depreciation amortization, and spending of, uh, for image 2026 will be as follows and reflecting increase in a capex for position of a battery Bill, uh, of a factory buildings and so on of the battery production, JB with the LG Energy Solution,
Masao Kawaguchi: For automobiles operations, with the expertise we have accumulated on internal combustion engines and hybrid technologies, our results of Q3 confirm that we are maintaining a business environment, a business characteristic that continually gives us profit if we exclude the non-recurring impact from EV and impact from tariffs. On the other hand, we are faced with issues including stagnated growth of EV market, less stringent environmental regulations in different markets, retreat of multilateral free trade system due to protectionism policies, heightened supply chain risk due to expansion of global procurement, further exacerbated by intensifying global competition from emerging OEMs. Thereby, we need to conduct a fundamental review of our strategies to rebuild our competitive strength.
Lastly, I would like to speak about the future direction of our operations, in view of the current business environment.
Masao Kawaguchi: In this situation, we believe that our current tasks are to build lean business characteristics to enable flexible actions against changing business environment and to realize product features and cost competitiveness that overwhelm those of emerging OEMs. To address those issues, firstly, we are working to completely settle within this fiscal year the losses related to EVs currently sold in North America. In addition, we are striving to make prompt management decisions in line with EV markets, such as disciplined expenditure control, EV product range, and review of CapEx plans aligned with the business environment. At the same time, to further enhance earning capability of hybrid models, we are preparing to launch next-generation hybrid systems as well as equipping the hybrid models with next-generation ADAS. We will communicate our review of fundamental medium to long-term strategy at an appropriate timing, sometime during the coming fiscal year.
Operations with the expertise we have accumulated on internal combustion engines and hybrid Technologies. Our result the third quarter confirmed that we are maintaining our business environment business characteristic that continually give us profit. If we exclude the non-recurring impact from Evie and impact, from tariffs, on the other hand, we are faced with issues, including stagnated, growth of EV Market less, stringent environmental regulations in different countries, markets markets, which reached a multilateral free trade system due to protectionism and policies. Heightened supply chain risk, due to expansion of the global Conte. Procurement further exacerbated by intensifying global competition from emerging oems, thereby, we need to conduct the fundamental review of our strategies to rebuild our competitive strength in this situation, we believe that our current tasks are to build new business characteristics to enable flexible actions against changing
Business environment, and to realize product features and cost competitiveness that overwhelm those of emerging OEMs.
To address those issues. Firstly, we are working, uh, to completely, uh, settle within this fiscal year, the losses related to EVS currently sold in North America. In addition, we are striving to make prompt, uh, management decision in line with EV markets, such as, uh, disciplined expenditure control, EV product range and review of paybacks, uh, plans aligned with the business environment,
At the same time, to further enhance the learning capability of hybrid models, we are preparing to launch next-generation hybrid systems, as well as equipping the hybrid models with next-generation data.
Masao Kawaguchi: Honda has multiple business domains including motorcycle and finance business operations, forming a well-balanced business portfolio, each of which helps us to generate cash flow and to maintain a sound balance sheet. Because of this, we have adopted a DOE indicator, which allows us to ensure stable returns and dividends aligned with the company's growth even in an uncertain and extremely volatile business environment. Through these initiatives, we will continue to strive to enhance corporate values so that we will remain a company expected to exist in the eyes of our stakeholders. This completes my presentation. I thank you very much for your attention. Thank you very much for your attention. So now, I'd like to take questions from the audience. We have already introduced you with Zoom for the questions. Please limit your questions to 2 questions due to the interest of time.
We will communicate our review of fundamental medium- to long-term strategy at an appropriate timing, sometime during the coming fiscal year. Honda has multiple business domains, including motorcycle and finance business operations, forming a well-balanced business portfolio, each of which helps us to generate cash flow and to maintain a sound balance sheet. Because of this, we have adopted a GOE indicator, which allows us to ensure stable returns and dividends aligned with the company's growth, even in an uncertain and extremely volatile business environment.
Through these initiatives, we will continue to strive to enhance corporate values so that we will remain a company expected through the existing eyes of our stakeholders. This completes my presentation. I thank you very much for your attention.
Thank you very much for your attention.
So now I'd like to take questions from the audience.
Masao Kawaguchi: If you are to ask questions, please turn on your microphone and the camera from your end. Thank you for your cooperation. Please push the raise your hand button if you have questions, please.
We have already introduced you with the Zoom for the questions. Please limit questions to two questions due to the interest of time, and if you are to ask questions, please turn on your microphone and the camera from your end. Thank you for your cooperation. And so, please push the 'Raise Your Hand' button if you have questions, please.
[Analyst]: Okay. Then the first question. This is from Mr. Yokoyama of Toyo Keizai. Okay. This is Yokoyama from Toyo Keizai. Can you hear me? Yes. Thank you. I have two questions. First question is I just would like to take your outlook for the full year. You are progressing beyond your budget already. But it is true that Q4, you tend to get a lot of expenses. But you have been saying that the expenses would be JPY 2,650 billion for the full year. There was one gap, so I wanted to check that. And then for the automobile profitability, I would just like to check. On the there were tariffs impact. If we include that, that would be IOS of 3.6%. But if you include hybrid, I think earlier you mentioned 8% of profitability. So if you say 3.6%, I thought it kind of sounds lower.
Okay, then the, uh, first, uh, question. Uh, this is from Mr. Yokoyama of Toyo Paper.
Okay, this is. Can you hear me? Yes, thank you. I have 2 questions. First question is, I just would like to take your outlook for the, uh, full year. Uh, you are progressing, um, Beyond, uh, the be beyond the, uh, your budget already, but it is true, uh, that the fourth quarter, you tend to get a lot of expenses. But uh, you have been saying that, uh, 2 the expenses will be uh, 2, sorry, uh, 2. 650, uh, for the full year, there was 1 job. So and then for the automobile profitability, I was just like to check
On the, uh, there were tariffs impact, uh, if we explore the, uh, include that. That would be, I’d say, 3.6%. But if you include, uh, hybrid, I think, uh, earlier you mentioned like 8% of profitability. So if it’s, you say, 3… 3.6%.
[Analyst]: So I would like to ask for your evaluation of the profitability of automobiles, and then would like to see what your real values are. Thank you. Okay. Thank you very much for your question, Mr. Yokoyama. First of all, for the specific numbers for that, this will be covered later. But this time, for Q4, we slid the results from Q3. So let me try to answer how we expect the financial results would land toward the end of the year. So compared with the Q3 results, the tariff impact will work on the positive side. And then the motorcycle and automobile unit sales, because we had favorable results in the Vietnam motorcycle, well, I should not say favorable, but the damage was less than we had assumed in Vietnam. So I think motorcycle, it will go positive compared to our budget.
I thought it was going to sound lower, so I would like to ask for your evaluation of the profitability of automobiles, and then would like to see what your real values are. Thank you. Okay, thank you very much for your question. Mr. First of all, for the, uh,
The, uh, specific, uh, numbers, uh, for that—uh, this will be covered by, uh, covered later, but this time, uh, for the fourth quarter,
[Analyst]: That is our assumption as well. However, for the North America automobile market, if we look at that and then going forward, I believe there will be further impact from BEV. So the sales will become difficult. So we will have to increase a bit of the incentive. That's one thing we're considering. But as a downside, another downside is that so far, we had the BEV with GM. Well, Mr. Fujimura will explain this later. But we need to do this negotiation with GM considering the compensation. So depending on how that comes out, we might have a little bit more expenses to be covered. So with that, that is why we're giving those numbers as a forecast. And then as the BEV environment, how it develops, maybe the GHG credits, and then in the finance, we might have losses from residual value on the leases.
Uh, well, so we slide it, the results from our fourth, third quarter. So, uh, let me try to answer how we expect, uh, the, uh, financial results will land toward the, uh, end of the year. So, compared with the third quarter results, the tariff impact, uh, will be, uh, on work on the positive side, and then the motorcycle unit sales, uh, because we had favorable results in the Vietnam, uh, motorcycle—well, I should not say favorable, but the damage was less than we had assumed in Vietnam. So I think, uh, motorcycle, it will go positive compared to a budget. That is the assumption as well. However, for North America, uh, automobile market, if you look at that and then going forward, I believe, uh, there will be further impact from BEV, so the sales, uh, will become, uh, difficult. So we will have to increase a bit of the, uh, incentive. That's one thing we're considering. But as a downside, another downside.
[Analyst]: So on the basis of those, we believe we are just assuming for Q4, the outlook is still maintained. Okay. So I would like to ask Mr. Fujimura to give a little bit more details, then. Okay. Okay. Thank you very much for your questions, Mr. Yokoyama. As you mentioned, the negative JPY 650 billion. So so far, we had a negative battery EV of negative JPY 650 billion. Battery EV, that's what we have been saying. So when we talked about the JPY 650 billion, so the GM-related issues that we talked about and then of the models that we are developing, we were doing a, let's say, we were doing a review of those models so as to write off certain assets. So with that, we recognized JPY 250 billion and then now JPY 400 billion of R&D. So we put total of JPY 650 billion in the budget.
Environment, uh, how it develops, maybe the GHC is credit. And then, uh, in the finance, uh, we might have losses from a regional value on the leases—lease. So, on the basis of those, we believe we are just assuming, uh, for fourth quarter. The result, the outlook is still maintained. Okay? So I just ask Mr. Fujimura to give a little bit more details, then,
Okay. Okay. Thank you very much for your questions. So your, as you mentioned, the $650 million negative,
So, so far, we had a negative battery EV of negative $650, about two EV. That's what we have been saying. So, when we talked about the $650 billion,
So the GM related issues that we talked about and then the of the models that we are developing, we were doing a uh, let's say we were doing a review of those models. So as to write off certain assets, so with that, uh, we uh uh, recognize 250 billion, and then now 400 billion, uh,
[Analyst]: This time, in the results, the portion, this is not for the GM portion, but for models in China, because according to the discussions with the partner, we have reviewed our product lineup. Some of the models or some of the development assets, those have been written off. So up until nine months of this year, we have JPY 270 billion. And then so that's JPY 270 billion for the nine months. But if we turn it into budgeted, let's say, amount, this will come to JPY 290 billion plus JPY 400 billion for R&D. So it is getting close to JPY 700 billion range. So those are the numbers that we have put into the budget. So this JPY 270 billion has already been current. And then the JPY 290 billion for the full year, so the JPY 20 billion remaining, the difference, this is up to the negotiation with GM.
Of R&D. So we put total of 650 billion in a budget. Uh, this time in the results. The portion not, this is not for the GM portion, but, uh, for models in the China because according to the, uh, discussions with the partner, uh, we are we have reviewed our product lineup.
[Analyst]: So the negotiation with them still has not been established. We have not been offered any number concerning that. So we are assuming we don't sorry. We don't know if the JPY 20 billion is sufficient or not. So because of that, looking at the sales situation and then maybe if you think about the exchange rate, that might be an upside, but this could be a downside factor. So that is why we are keeping the outlook forecast unchanged. This JPY 700 billion BEV portion, next year well, if this JPY 200 billion is no longer there next year, then it will only be JPY 400 billion R&D. That would be the starting line for next fiscal year. But at the end, as Mr. Kaihara explained to you, currently, the current EV market considering the current EV market, I think that we need to rebuild our framework of our strategy.
Uh, some of the models or the some of the development assets, those have been written off. So up until 9 months of this year, we have a 270 billion yen. Uh, and then, so the 7 billion yen for the 9 month, but if we are turned it into uh, budgeted uh, let's say uh, amount as you come to 290 billion, uh, plus 400 billion for R&D. So it is getting close to 700 billion range. So those are the numbers that we have put into the budget. So these are 20070 has already been incurred and then for years. So the 2000 remaining the difference. This is up to the uh, negotiation with GM. So the negotiation with them is still not has not been established. We have not been offered any number of concerned that. So, we are assuming we don't. Sorry, we are don't know if the 2020
Sorry, 20 billion is sufficient or not. So, because of that, uh, looking at the sales situation, and then maybe, uh, if you think about the exchange, uh, rate that might be, uh, might be applied, but this could be a downside factor. So that is why we are keeping the outlook forecast unchanged. This, uh, 700 billion portion, uh, next year, uh, well, if there's 200 billion is no longer there next year, then it will—
[Analyst]: So we'll take this. Well, are we going to really take this JPY 400 billion as a starting point, or are we going to review this? We don't know how much of the disciplined expense cost control is going to be. We are still in the process of formulating those plans. So we hope to be able to issue outlook prospect of that sometime in the future. When it comes to ICE, it was like JPY 900 billion or close to JPY 1 trillion yen earnings, something we have. However, we do see declines in unit sales in Asia, and we see some impact from exchange rate. And then the semiconductor impact, we are recovering a little bit of that even though this is one time. But so without the tariff, that's JPY 700 billion. And then let's say if there's no tariff, it'll be JPY 400 billion on the plus.
Only be $400 billion R&D, that would be the starting line for next fiscal year. But at the end, as, um, as Mr. Kaihara explained to you, uh, currently the current EV, uh, market, uh, considering the current market. I think that we need to rebuild our framework of our strategy. So we'll take this, uh,
[Analyst]: So JPY 400 billion probably would be the starting line. So JPY 300 billion yen tariff impact, it cannot be recovered just immediately next fiscal year. So we want to closely monitor the cost. So we might proceed with more expanding of our local procurement and try to control cost more closely. I hope that answers your question. But when it comes talks about the upside, you are assuming the exchange rate at 148 per dollar. But I think this would go toward at the upside, right? I think if things progress as things are going right now, yes. As I might have mentioned, so per dollar, 1 yen would give us an earning plus of JPY 10 billion yen or so throughout the year, that is, of course. So we'll slash that by 4 to get a quarter-and-quarter number per yen of per 1 yen against the dollar fluctuation. Okay.
Well, are we going to really take this 400 billion as a starting point? Or are we going to review this? We don't know how much of the the discipline to expense customer control is going to be, uh, going to be we are still in the process of formulating those plans. So we hope to be able to issue, uh, like a prospect of that sometime in the future when it comes to, uh, I see, uh, it was like, uh, 900 billion yen or close to 1:30 on the end. Uh, earnings is something we have. However, we do see declines in unit, sales in Asia, and we see some impact from our exchange rate, and then the semiconductor impact. Uh, we are recovering a little bit of that even though this is 1 time. But so without the Tariff, uh, the 700, and then, uh, let's say, uh, if it's, uh, there is no, tariff will be 400 billion. So, in on the plus, uh, for for 400 billion, probably would be the starting line.
[Analyst]: Thank you very much, Mr. Yokoyama. Next question, please, from Asahi Shimbun. Mr. Miura, please. Asahi Shimbun, Miura, thank you for your explanation today. I have 2 questions. One, page 20, EV market trends with the model lineup prioritization and focus, as you mentioned here. Could you elaborate on that, please? The basic idea and the directions, please explain about that to me. Another question is also on page 20 about reorganizing the longer-term strategies. Please tell us about the directions of those strategies. Thank you for your question, Mr. Miura. So, EV markets and our outlook for that. Basically, BEV markets for us are in North America and in China. For North America, the market environments, for instance, there is the IRA now enacted and a credit for BEV. We cannot really see the values anymore today.
Question. Well, when it comes about the upside, you are assuming are the exchange rate at 4 148 per dollar, but I think this will go to toward, uh, at the upside. Right? I think if things are progressed, as we are going right now. Yes, as I might have mentioned. So per dollar 1 Yen, uh, would have, uh, um, give us a earning plus of 10 million, so, uh, throughout the year that is, of course so. Well slashed Up by 4, to get a quarter and a quarter number per Yen of per 1 Yen against the dollar fluctuation. Okay. Thank you very much Mr. Yokoyama.
Please.
Thank you for explanation today.
And, uh, I have two questions.
Uh, on page 20, uh, about the EV market, or friends, uh, with the model, uh, lineup. Uh, prioritization and focus, as you mentioned here, uh, could you elaborate on that? Please, the basic idea and the directions, please, uh, explain about that to me. And, uh, another question is also on page 20, uh, about, uh, reorganizing the longer-term, uh, strategies, and please, uh, tell us about that.
But the directions of other strategies.
I thank you. Uh, your question, Mr.
So, if we market and, uh, our attitude for that,
uh basically um be Market
[Analyst]: Demand environments for EVs are quite negative today for us. Recent EV situation today would be leading to the idea of reorganizing the EV strategies for that market. Last year, we had some tax credits, and we had accelerated some prior to the September period. However, now, the market is slowing down in this end. In that regard, EV strategies in the future have to be revisited. For China, EV market is last year, for instance, 1/2 of the market share in China are supported by the EVs or BEV in China. In terms of Honda EVs, unfortunately, there are local EV manufacturers over there. In terms of the prices, UI, UX perspectives, we are not there. We are behind those companies. In terms of the competition in the software environments, we are still behind other companies.
For us, uh, are in the, uh, North America and in China. For North America, the market environments, uh, for instance, there is the ACC now evaluated, and, uh, uh, credit for BEV. Uh, we cannot really see the values anymore today, and demand environments for EVs, uh, quite negative for today for us. And, um, recent, um, uh, EV situation today, uh, would be leading to the idea of reopening the EV, uh, strategies, uh, for that market. And then, lastly, we had tax credits and we had, uh, uh, accelerated some, uh, prior to the year of September period. However, now, the market is just slowing down in the same, in that regard.
If a strategy in the future has to be revisited, and therefore China.
EV market is, um, last year for instance, um,
They are half of their market share in China, uh, are supported by DB. So they have, uh, in China, and then in terms of the Honda EVs, unfortunately,
[Analyst]: Unfortunately, we do not have the established image of the business in EV area over there. So we have to go back to us correct and then rebuild our strategies for EV. For the cost perspective, the local suppliers over there or engineering companies over there, we would have to make use of those presence. That way, we have to turn our direction dramatically so that we can then gain our cost competitiveness utilizing them. NOA, ADAS, those will be updated with them so that we can be competitive again to challenge the markets once again. In that regard, as I mentioned the other day, the timing of the launches will be revisited in order to have our entry once again in the EV market over there. Thank you very much. Thank you very much. Thank you very much, Mr. Miura. Okay. This is Okinawa from Nikkei Newspaper.
There are, uh, local AV manufacturers, uh, over there and, uh, in terms of the prices, uh, your UX perspectives. Uh, we are not, uh, there—we are behind, uh, those companies. And then, in terms of the competition in the software environments, we are still behind other companies. Uh, unfortunately, we, we do not have the established image of the business in the NEV area over there. So we have to, uh, go back to us—correct—and then rebuild our strategies for EV from the cost, um, perspective.
The local suppliers over there were engineering companies over there. We would have to make use of those, uh, presence, uh, that way, uh, we have to turn our, um, direction dramatically, so that we can then gain our cost, of course, competitive. This utilizing them.
N o a AJ. Uh, those will be updated, uh, with them so that we can be a competitive again, uh, to challenge, uh, the market. So, once again in that regard, uh, as I mentioned that the other day, the timing, uh, of the launches, uh, will be be Revisited, uh, uh, in order to uh, have uh, our entry 1, second in the EV Market over there. Thank you very much.
Thank you very much. Thank you. Thank you very much, Mr. Okay, next question.
[Analyst]: Yes, I can hear you. Concerning, I'd like to ask about the EV again. So throughout the year, you said JPY 290 billion for the year. Is there a possibility of, let's say, further impairment posting of impairment losses? So that's one question. And the other question is concerning semiconductor. So you said that you have a good prospect for preventing recurrence of this shortage problem happening. So I just would like to know what you have been doing. And then the JPY 150 billion negative for China. So any impact for Japan and China? So I would like to know how the situation has been for China and Japan. Okay. Thank you very much, Mr. Okinawa. First, about the EV, the impairment losses for the non-recurring one. Well, we don't know what's going to happen, but we have been processing this in accordance with the accounting principles.
I like to ask about the EV again.
So for throughout the year, you said ¥2,290 billion for the year.
Is there a possibility, uh, of, uh, let's say, further impairment, like a booking, uh, posting of impairment losses?
So that's one question, and about the other question—it's concerning semiconductors. You said that you have a good prospect for preventing recurrence of, uh, this shortage and the problem happening again. So I just would like to know what you have been doing. And then, a 100 to 150 billion yen negative for China.
So, any impact for Japan and China?
So, I would like to know how the situation has been for China and Japan. Okay. Thank you very much, Mr. Okinaga. First, about the EV.
[Analyst]: So whatever we know, we have incorporated into our books. However, as mentioned by Mr. Fujimura, we don't know what kind of compensation issues might come up with GM. So there's a bit of an unclear future prospect. And then actually, as I've explained about the, because the EV market is dramatically changing, so we would need to monitor our sales volume trends. And then we might have to take some actions if needed. Any details you can add? Okay. Then, if the intention of your question is about the impairment losses for the EV business in general like at other OEMs because we are not sure what's happening at other companies. So I would like to refrain from mentioning anything about other companies.
Are the impairment losses for the uh, non recurring 1? Well, we don't know what's going to happen, but we have been processing this in account, accordance with the accounting principles. So whatever. We know we have Incorporated, uh, into our books. However, uh, as a mentioned by Mr. Fusy Miura. Uh, we don't know what kind of a compensation issues, might come up, uh, with the GM. So there's a bit of a unclear future Prospect. And then actually, uh, as a
Explained about the because the EV Market is a dramatically changing. So we would need to uh monitor our sales volume um Trends and then we might have to take some actions if needed.
Any details? You can add
Okay, then the intention of your question is, uh,
[Analyst]: But what we are saying is that with the models that we have developed as the die-in tooling and then the development R&D assets, some of those have to be written off. This is not really impairment, but we would need to do some compensation. Because of the review that we have conducted as a product lineup, we are booking some temporary losses, those expenses that are incurred. But you asked about the impairment. But impairment means that this is a CGU that we use. This is CGU, whether this leads to cash generation in the future, and then how the business environment has been doing, and what management decisions have been in view of those. In view of all of those, we are getting audited. With the auditors included, we discuss.
About the impairment losses for the EV business in general, like, at other OEMs, because we are not sure what's happening at other companies. So I would like to refrain, uh, from mentioning anything about other companies. But what we are saying is that with the models that we have developed,
As the dying toolings, tooling, and then the development R&D assets—some of those have to be written off, and then, this is not really impairment, but we will need to do some, uh, compensation.
So, so because of the review that we have conducted conducted as a product lineup. We are booking some, uh, temporary losses. Uh, those expenses that are incurred. But are you asking about the impairment? But impairment means that
This is a CGU that we, um, use. Uh, this is Sue. Whether this, uh, leads to charge generation in the future, and then how the, uh, business environment has been doing, and what management, uh, decisions have been in view of those.
[Analyst]: So we are not recognizing anything, any impairment like that have happened in other companies. But we have been talking with the accounting. We have been discussing on a continuous basis. And then we have been discussing how we at management should assess those costs and expenses. So I just wanted to mention that whatever that were incurred up until three quarters, those are only those associated with the product lineup review. We don't know what we don't know if it's going to be enough, but we have included whatever we can so far. And then the second question, you asked about semiconductor. So last year in North America, from the end of October, we had to go into production adjustment and a production suspension in Mexico. So the impact actually is, I think I mentioned the 120,000 units affected.
And then with the view of all of those, uh we are getting our audited and then with the with the Auditors included we discussed. So we are not recognizing anything any impairment like uh that have happened in other companies, but we have been talking with the accounting. We have been discussing on a continuous basis and then we do we have been discussing how we had management. Should they assess
Those, uh, cost, cost and expenses... So, so, I just wanted to mention that whatever that were incurred up until three quarters, those are only, uh, those associated with the product, uh, lineup, uh, review. We don't know, uh, what, uh, we don't know as it was going to be, uh, in, uh, enough. But, uh, we have, uh, included whatever we can so forth. And then, the second question you asked about semiconductor, so last year in North America,
[Analyst]: We hope that we are able to recover a bit. So the affected would be 110,000 units. But it would be a JPY 150 billion impact, we assume. So of that, this is unfortunately. But for Japan and China, we have had some disruptions in production. From China, we had about three weeks or so from the beginning of the end of the year, sorry. And then for Japan, we have had to suspend production like at Suzuka for two or three days and then did some production adjustment for a few days after that. So because of that, even though there was an impact once, but for Japan and China, we have the capacity to sufficiently recover. So we will be able to complete the recovery of those lost production before the end of this fiscal year.
Uh, from the end of October, uh, we had to go into, uh, production, uh, adjustment and a production suspension in Mexico. So the impact actually is, uh, I think I mentioned 120,000 units affected. We hope that we, uh, have been, we are able to, uh, recover a bit, so the affected would be 110,000 units. But
It would be 150. 150 billion yen impact, we assume. So of that, uh, this is unfortunate, but for Japan and China,
We have had some, uh, disruptions in production, uh, from in, uh, China. We heard about, uh, three weeks or so from the beginning of the, uh, the end of the year. Sorry. And then for Japan, uh, we have had to suspend our production, like, at Suzuka for two or three days, uh, and then, I did some production adjustment for a few days after that. So, because of that, even though there was an impact once, but for Japan and China,
[Analyst]: So in terms of business impact, it is very limited. So we have not considered that into our business. But anyway, we have faced those problems. So basically, to the suppliers, so let's say we are trying to do a multi-sourcing of the suppliers. And then we have been asking them to keep an appropriate inventory levels. However, some of the suppliers have not, unfortunately, provided us with that much of a details. So to be blunt, we have been relying heavily on our suppliers. So that's something we are reviewing fundamentally so that we will keep a close watch over our supply chain all the way upstream and then see what kind of risks there may be. And then we will do an appropriate risk assessment and then keep appropriate inventory management or go multi-sourcing as well.
We have the capacity to sufficiently recover, so we will be able to complete the recovery of those, uh, loss, uh, production by before the end of this, uh, fiscal year. So, in terms of business impact, it is very limited. So we have not considered that.
Into our business. But anyway, we have faced those problems. So basically to this suppliers. So let's say the we are trying to, uh, do a multi-sourcing of these suppliers and then, uh, we have been asking them to keep an appropriate inventory levels. However, uh, some of the suppliers have not uh, unfortunately have not provided us with that much of a details.
So, to be blunt, we have been relying heavily on our suppliers, so that's something we are reviewing, uh, fundamentally, so that we will keep, uh, close watch, uh, over supply chain, all the way up to upstream, and then, uh, see what kind of risks there may be. And then we will do a appropriate risk assessment, and then, uh, keep, uh, in appropriate, uh, inventory management.
[Analyst]: And then that needs to be done from the development stage as well. So at the earlier development stage, we have been looking at the cost sourcing. Well, in view of that, there are some single sourcing strategies as well. But in terms of business continuity strategy, if we go single sourcing, we will pay careful attention to upstream of each of those components containing semiconductor. And then we will decide how much of our inventory we will hold. And then we will do a review about what is going to happen if we go multiple sourcing, and then take actions accordingly. Currently, as you may know, the semiconductor issue, in addition to what we have experienced so far for the memory, and then, of course, the rare earth issues, are there. We are aware of those.
Or go multi-sourcing as well, and then that needs to be done from the development stage as well. So at the earlier development stage, we have been looking at the cost, uh, sourcing. Well, uh, in view of that, there are some single sourcing strategies as well, but, uh, in terms of business continuity strategy, if we go single sourcing, uh, we will pay, uh, careful attention to upstream of each of those components containing, so semiconductor. And then we will decide how much of an inventory we will hold. And then we will do a review about what is going to happen if we go multi, multiple sourcing and then take actions accordingly. Uh, currently, as you may know,
On the semiconductor issue, in addition to what we have experienced so far for the memory,
[Analyst]: So when those issues arise, we would, of course, at this point in time, I don't think there is anything that would lead to immediate problems right now. But in the future, of course, it is, well, it is not very clear. So we will work closely together with the suppliers and take actions as needed. However, for the rare earth metals, it is nothing that one single corporate entity can do anything about. As you may know, at the JAMA level as well, this is being discussed. And also, with the governmental agencies included, this needs to be reviewed. So we would like to deepen our collaboration with different entities. Thank you very much. This concludes my answer. Next question, Mr. Ukita from Yomiuri Newspaper, please. Ukita from Yomiuri Newspaper. Hello? Thank you for the explanation. I have two questions. One, it's about tariff impact.
And then, of course, the rare earth, uh, issues are there. We are aware of those. So when those issues arise, uh, we would, of course—at this point in time, I don't think there is anything that would lead to immediate problems right now—but in the future, of course, it is, uh, well, uh, it is not very clear. So we will work closely together with the suppliers and, uh, take actions, uh, as needed. However, for the rare earth metals, it is nothing that, you know, say, one single corporate entity can do anything about. As you may know, uh, at the JAMA level as well, this is being discussed, and also with the governmental agencies included, uh, this needs to be reviewed. So we would like to deepen our collaboration with different entities. Thank you very much. This concludes my answer.
Thank you very much, Mr. Oka.
Next, uh, question. Mrita, from please.
Newspaper.
Hello.
Thank you for the explanation. I have 2 questions.
[Analyst]: Little by little, compared to the start of the year, it is coming down. It is down from the JPY 386 billion from the beginning now. And could you tell me more about the reasons behind this? And then the other question is about sales situation of the automobiles. Your target is there, but it's not achieved. And in order to achieve the target volume of the sales, what are you going to do with Japan and North America market? So tariff, Mr. Fujimura, is to address. Thank you very much for your question, Mr. Ukita. And as you said, until last time, a gross impact in the first half, JPY 385 billion impact expected because of tariff and the recovery of the cost expected JPY 50 billion and then JPY 338 billion net impact. And then 110,000 units reduced in the US because of the semiconductor situation.
[Analyst]: Including that, JPY 338 billion net actually is because of the foreign exchange and so on. It will be about JPY 360 billion. That's the true gross. And there are 50 recoveries. So net was a JPY 310 billion impact incorporated in the accounting. And then the recovery part, they were realized. Therefore, JPY 310 billion yen, this is the number finalized, let's say, for this. And what kind of recovery plans incorporated in the JPY 50 billion? And with the suppliers and others, we had made adjustments looking at the logistics and so forth. And then additional local procurements were progressed as well to achieve a USMCA. And we are more confident in achieving that. Plus, within US, credit utilizations is also to be added. And we asked quickly how far we can incorporate from that. And we had a broad consideration.
300 or data 38 billion, average impact, and then, uh, 100,000, uh, unit, uh, reduced, uh, in the US because of the, uh, super conduct situation. And then including that, uh, 338 billion net, uh, actually, uh, is, um, because of the, uh, foreign exchange, just so on, uh, it will be about 36,060 billion. That is the actual gross, and there are 50, uh, recovery is so, uh, net, uh, was 333 billion, in fact, uh, incorporated in the, uh, accounting and then recovery part.
Uh, they were realized, uh, therefore, uh, 310 billion yen. Uh, those, uh, this is the number, um, finalized. Let's say, uh, for this. Uh, and, uh, would—what kind of recovery plans, uh, incorporated into the 50 billion?
[Analyst]: Eventually, a JPY 50 billion recovery plan is now realized into the JPY 310 billion pay gap. As for the sales strategy, let me address the question. For North America, as I mentioned a little earlier, our credits were pushed toward the end of the period, and it was included. Then, BEV drops quite dramatically. Therefore, going forward, it will be staying at a very low level. Going forward, we have to be focusing on the hybrid brand to take advantage of the brand to make sure that those models will be selling more. As of today in North America, various companies had impact of the tariff, and we were thinking that there will be increasing the selling prices. However, we do not see the dramatic selling price increases, and we had seen some incentives utilized in different areas.
And, uh, uh, where the supplier is, uh, and the others we had made adjustment, uh, looking at, uh, the logistics and so forth. And then that, you know, uh, local procurement, uh, where progressed as well, uh, to achieve USMCA and we, uh, more confident in achieving that, uh, plus within US. Uh, credit utilization is also, um, to be added. And we, as for the half hour, we can incorporate, uh, from that. And we are at a broad, um, uh, consideration and then eventually a $50 billion recovery plan is and I realized into the year 3, $310 billion IP gap. And, uh, as for the sales strategy, let me address that question for North America.
Um, as I mentioned a little earlier, uh, ah, ah, credit, uh, where, uh, pushed, uh, toward the end of the year, uh, period. And it was, uh, included in the web, uh, drops, uh, quite dramatically there for this going forward. This is a very low level. And then, going forward, we have to be focusing on the hybrid, uh, uh, brand, uh, to take taking advantage of the brand to make sure that those, uh, models will, uh, be sending, uh, more. And then, uh, as of today in North America,
[Analyst]: The actual prices are on the decreasing trend, practically speaking. Therefore, we have to use incentives. At the same time, we have to appeal the hybrid models. And customers who are looking for the affordable models, the ICE models, can be provided too. So we try to cater for the needs of the customers to try to get by the situation here. And together with the dealers, we have to do the marketing activities. And we're not really focusing too much, however, in the area of the fleet, which was not really focused before. We have to work on that to sell more cars in the fleet customer field. And Japan, hybrid models, that is very focused in the Japanese market. And Japan, rather than the competition, I think it is more of the customers and how we can include and support those customers.
And then I would, we were thinking that there will be increasing prices. However, we do not see the Earth automatic, uh, selling price increase. And then we had, uh, seen some incentives, uh, utilized, uh, in different areas. And then, uh, the actual, uh, prices, uh, on the, uh, decreasing trend, uh, practically speaking therefore, uh, we have to use incentives.
Uh, at the same time, uh, we have to appeal the hybrid models, uh, and, uh, customers who are looking for the, for the world models—they are, uh, models that can be, uh, provided too. So, we try to cater for the needs of the customers, to try to get by this situation here. And together with the dealers, uh, we have to do the activities and, uh, we're not really focusing too much. However, uh, in the area of the fleet, which was not really focused before, we have to, uh, work on that, uh, to sell more, uh, cars, uh, in the fleet customer, uh, field and Japan.
A Hybrid models.
And that is, um, very focused, uh, in the Japanese market and Japan rather than the competition. Uh, I think it is more about the customers, uh, and how we can, uh, include and, uh, uh,
[Analyst]: The dealers will make sure that they have a close contact with the customers. For instance, one-on-one strategy, one person looking at one customer, one-on-one strategy to try to satisfy their needs for sure. And that is very down to the ground activity, let's say. But it is what we are up to. And then next year onward, MMC and other campaigns expected to try to maintain the market share or improve the market share with those plans. Thank you very much. That is all from me. Thank you. Mr. Yasunaga, over to you. はい。すいません、音声が少し繋がってないよう。 Okay. Looks like he's not connected. ちょっと1回次行かせていただきます。 May we proceed to the next reporter first for the time being? Okay. Okay. Now we got your voice. Yes, you're coming through now. Sorry about that. This is Yasunaga from NHK. Thank you very much for the presentation. One question. 先ほどもちょっと質問出たところなんですけれども、そのレアアース、そう、 concerning that explanation.
Support those customers. Uh, the dealers will um, make sure that uh they have a close contact with the customers. For instance, 1 on 1 strategy, 1 uh person uh looking for uh looking at uh 1 1, customer 1, on 1 strategy to uh try to uh satisfy their needs uh for sure. And that is a very uh, down to the ground activity. Let's say. But
Here, up to. And then, next, your own word—MMC and other campaigns are expected to try to maintain the market share or improve the market share with those plants. Thank you very much. That is all from me. Thank you.
Thank you very much. The next question, I come from NHK. Uh, Mr. Yasu Naga, over to you.
Hi. Okay, looks like, uh, he's not connected. Uh, may we proceed to the next, uh, reporter first for the time being? Okay. Okay, now we got your voice. Yes, you're coming through now. Uh, sorry about that. Uh, thank you very much for the presentation. One question.
[Analyst]: So there is an export restriction on China, is my understanding correct? And also about the diversification of supply chain. So for rare earth metal, there is no way you have no choice but to rely on China. But what would be your appropriate action in response to this situation? Okay. Thank you very much, Mr. Yasunaga. For the rare earth metal concern, yes, as you said, currently, rare earth metal, those are subjected to export restriction from China. But currently, are the exports stopped? But all we can do is apply for export, do the apply for exports. And we do see those exports coming through. But sometimes it just takes some time, a longer time. So if you ask us, can we get the exports coming through as expected? Not really. So as you know, rare earth metals, those are used in different various components.
The rare earth metals Supply concern concerning that explanation. So, there is a export restriction, on China, is my understanding correct, and also about the, uh, diversification of Supply chains. So, where for Rare Earth metal, there is no way, you have no choice, but to rely on China. Uh, but what would be the your appropriate, uh, action in response to this situation? Okay? Thank you very much, Mr. Yasunaga for the rare earth metal? Uh, concern.
Yes. As you said, uh, currently, I'm aware of metals that are subject to export restrictions from China. But currently, uh, are they—are the exports stopped?
[Analyst]: So if the supply stops, the risk is high. So we need to ensure, as I mentioned, we need to apply without any delay, apply for permission for exports. And then, of course, when it comes to fundamental countermeasure, is to go without use of rare earth. But that would take a longer time for development. So currently, we will take some parts that are difficult to switch over or take a longer development. All we can do is to simply hold inventory. But currently, we don't have any actual problem in the supply. But how is it going to be in the future? We don't know. It is very uncertain, as I mentioned. So the supply, we need to work closely together with our suppliers, interview them, and then ask them what kind of supply chain our supplier have for the rare earth that's needed for their components.
All I can do is apply for, uh, export, uh, through the five for exports, and we do see those exports coming through. But sometimes it just takes some time, a longer time. So if you ask us, uh, can we get the, uh, exports coming through as expected? Not really. So as you know, rare earth metals are—those are used in different, various, uh, components. So if the, uh, supply stopped, the risk is high. So—
We need to ensure, as I mentioned, uh, we need to, uh, apply without any delay—apply for our permission for exports. And then, of course, when it comes to the fundamental countermeasure, uh, it is to go without, uh, use of rare earth. But, uh, that would take a longer time to develop.
So currently, uh,
[Analyst]: So we will continue to consider our permanent, the long-term countermeasure. And this would be for more medium term, but we will consider development of components and components that do not use the rare earth. But for the time being, all we can do, the first thing we can do is to secure inventory. And then also secondly, to apply for export permissions on a timely manner. So those are the things that we can do currently. I hope that answers your question. Thank you very much. If not, this rare earth-free components, specifically, what kind of components do you have in mind? And where would be the real critical point? Well, there are different components, but there are different types of rare earth. So some are used in motor, some used in meters.
We will take, uh, some parts that are difficult to, uh, switch over, uh, or take a longer development. Uh, all we can do is to Simply hold, uh, inventory. But, uh, currently, we don't have any, uh, actual problem in the supply, but it, how is it going to be in the future? We don't know. Uh, it is, uh, very uncertain as I mentioned. So the supply we need to uh, group work closely together with our suppliers, uh, get interviewed them, and then ask them, what kind of supply chain our supply. You have, uh, for the uh, the Earth that they the rare earth as needed for their components. So for the we will continue to consider our permanent the long term uh to counter measure. And we will, this will be for no medium term but we will consider development of uh, compartments and components that do not use the rare earth. But for the time being all we can do the first thing we can do.
First is to secure inventory, and then secondly, to apply for export permissions in a timely manner. So those are the things that we can do currently.
Is that—I hope that answers your question. Thank you very much. If not, uh, this, uh, rare earth–free components, uh, specifically, what kind of components do you have in mind, and where would be the real critical point? Well, I—well, there are different components, but there are different types of rare earth.
[Analyst]: So for each and every component that uses rare earth, for every one of them, we are looking into what can be done to replace them without making them without rare earth. Thank you very much, Mr. Yasunaga. Ms. Nagai from TV Tokyo, yes. Thank you. Question one about the rare earth. Q3 alone sales in that period for automobiles, excluding the automobile sales, we had a reduction of the volume. And excluding the impact by the semiconductor, what is the situation as compared to the expectations in the beginning of the year? And the second question is about page 20. As Kaihara said, the direction of the businesses going forward. You said that it is going to be a dramatic revisiting of that. And as I heard about incentives in North America, there could be kind of limitation to improve the profitability by doing by itself alone.
Uh, some are used in meters, so—
So, for each and every component that uses rare earth, for every one of them, we are looking into what can be done to replace them without making them—without a rare earth. Thank you very much, uh, for, uh, uh, for Mr.
So, uh, from TV to yes. Um, thank you. Question 1.
About, uh, the earthquake alone sales in the period for automobiles, excluding the automobile sales. We had a reduction of the volume and, uh, excluding the impact by the semiconductor. Uh, what is the situation as compared to the, uh, expectations in the beginning of the year? And the second question is about uh 20 Page 20. Uh as kson said, the direction of the our business is going forward is that it is going to be a dramatic revisiting of that. And as I heard about the incentives with the North America, um,
[Analyst]: But I suppose that you're still speaking to Nissan or Mitsubishi, not just those two. I'm thinking about the possibility of the collaboration with other companies other than those two. Thank you very much, Ms. Nagai, for your question. And 3 months volume, right? That's your question, right? Yes, correct. And then volume, you mentioned that the volume had declined for that period here on the air, I suppose. But for the automobiles, actually, the volume sales increased as compared to the plan for the automobile businesses for the Q3. You're comparing from last year, same time last year, right? And for the original plans Q3, we had actually overachieved the plan for the Q3 automobile. And as compared to last year, it declined because of the next barrier, semiconductor impact. That is the largest. And also Chinese market for ICE, EV/NEV market is expanding in China.
There could be kind of limitations to improve the profitability by doing care by yourself alone. But, uh, I suppose that you still are speaking to Nissan or mutually. She, uh, not just, uh, those two. Uh, I’m thinking about, uh, possibility of the collaboration with the other companies other than those two.
Thank you very much for your question. And, um,
3 months. Um,
Question, uh, available. Right? That's the question, right? Yes, correct. And then, uh, volume, uh, you mentioned that, uh, the volume had declined for the period on, I suppose, but for the automobiles actually, uh, the volume sales, uh, increased, uh, as compared to the plan for the businesses for the third quarter.
You're comparing from the same time last year, right?
For the original plans, uh, third quarter, we had actually, uh, uh, overachieved, uh, the plan for the third quarter of the bill and, uh,
[Analyst]: ICE market is shrinking in China because of which volume in China is in a tough situation. So year-on-year, it dropped. That is about the volume. What was the next question? はい。Allianceのご質問です。 Alliance question, right? Nissan alliance. Well, actually, with Nissan. 企業統合といったそういった話ですか。 The integration possibility, we do not talk about that at all now. I have to say that. Another thing is that, as you said now, development costs will be needed in the future. For instance, software, E&E architecture, so forth, would require investments. For the future EVs, batteries, E-axle, if we can commonize those or have a co-development together, that will help reduce the development cost. Or cost itself may reduce thanks to that. However, for those matters, we continue to discuss with Nissan. However, not just Nissan.
Last scoop because of the next barrier. Uh, semiconductor impact that is the largest and also Chinese, uh, market, uh, for ICE. Uh, if we never have a market, uh, is increasing, expanding in China, and, uh, ICE market is shrinking in China. Because of which, uh, well, they, in China, is in a tough situation. So year on year, it dropped.
And so, uh, that is about the volume.
and,
What was the next question?
The alliance—Alliance question, right? And, uh, uh, Nissan Alliance.
Well, uh, actually, uh, with the Nissan.
uh,
The integration possibility—we do not talk about that at all now.
And I have to say that. And another thing is that,
As you said now, uh, development cost. Uh,
Will be, uh, needed in the future. Uh, for instance, uh, software in architecture support, uh, with requirements and for the future, EVs, batteries, e-axle.
Uh, if we can harmonize those or have a core development together, that will help reduce the development cost, or cost itself may reduce, uh, thanks to that. However, for those matters, uh, we continue to discuss with Anjum.
Uh, however, not just an, uh,
[Analyst]: If it is possible to build a relationship like them with other alternative companies, of course, as long as we can expect a win-win result altogether, of course, for those, we will continue to consider other possibilities. And that is all for your question. Thank you very much. はい。ナガイ様、ありがとうございました。続いてのご質問です。日刊自動車新聞の藤原様。日刊自動車新聞、Daily Automotive Newspaper. 日刊自動車新聞の藤原です。This is Fujiwara from Daily Automotive Newspaper. Yes, we can hear you. Okay. I have two questions as well. My first question is about the automobile, the factors for us. You had a big contribution from the selling cost that helped to grow your revenues. So I wanted to know what region and what product. And then this was a second question. This may have been covered by Toyo Keizai's question. But the hybrid volume has grown by about 5% in Q3.
If it is possible to, uh, build a relationship like them, uh, with other alternative companies, uh, of course, uh, as long as we can expect a win-win result, uh, all together. Of course, uh, for those, we will continue to consider, uh, other possibilities, and that is all for your question. Thank you very much.
Thank you.
Our next question comes from, um, Mr. From.
Newspaper.
Hi, this is Fuji from Daily Automotive Newspaper. Yes, we can hear you.
2 questions as well. My first question is about the automobile.
Uh, the, uh, the factors for cross, uh,
You had the big contribution from the, uh, selling cost, uh, that helped to grow your revenues. So I wanted to know what reason and what, uh, products.
And then, uh, this was, uh, second question. This may have been covered by Toyota's, uh, news, uh, question,
[Analyst]: So how much is the? I would like to know what kind of contribution this 5% growth of volume in Q3. Okay. はい。ありがとうございます。第三質問です。 Okay. Thank you for your questions. I would like to. 昨年との比較。 This is from year-over-year comparison, I believe. So selling price and cost impact that worked to the plus, which was in automobiles, that was a sorry, that was for automobiles. There was a bit of a plus in the selling price and cost impact. If you look at the total graph, it's about JPY 60 billion. There was about JPY 40 billion for automobiles because this is from selling price impact. When we say selling price, per year, at the beginning of the term or in fall, we do go through price hikes. So of the JPY 40 billion or so, about half of it happens in the states.
But, uh, the hybrid, uh, volume has grown by about 5% in the third quarter.
So, what—how much is the contract? I would like to know what kind of contribution this 5% growth, uh, has in value in the third quarter? Okay, thank you for your questions. I'd like to—
This is from year-on-year comparison, I believe so. Sorry, the selling price and cost impact that work to the plus.
Which was in automobiles. That was six. Sorry, that was 'A' for automobiles.
Like you’re not doing—uh, that was—it was a bit of a plus in the selling price, and it cost him. But if you look at the total graph, it’s about 6, uh, billion. Uh, there was about ¥40 billion for automobiles because this is from selling price impact. Let me say, selling price,
For a year at the beginning of the term, or in fall, we do, uh, go through, uh, price hikes. So, of the ¥40 billion or so, about half of it is, uh,
[Analyst]: Then for the other regions, those are just prorated, if you can prorate it, to different regions by the volume. Then the hybrid volume for Q3, for the hybrid, the unit sales in the states, well, particularly in the states, hybrid is doing very well. Then how we do the incentive, incentive can be kept low relative to the ICEs. However, the competitors were coming into the hybrid market. So, if this, our favorable condition, of course, is not going to last forever. So on our part, we will be getting into the transition period for different models. Competitors are going to come up with new models. So we need to kind of maybe build up, spend some more incentives. But incentives, sorry, the hybrid requires relatively lower incentive compared to petrol engines.
It happens in the States. And then, for the, uh, other regions—uh, those are just prorated. If you can prorate it to different regions by the volume, and then the hybrid volume.
Uh, for for the third quarter, for the hybrid, the unit sales, uh, in the states. Well, particularly in the states, uh, hybrid is doing very well, but, uh, and then how we do, the incentive incentive, can be kept low, relatively relative to the Isis. However, the competitors were coming into the hybrid market. So I, if this, you know, our favor of a condition, of course, with our last forever,
[Analyst]: But in the future, we might have to spend some more incentives in the future. But on the other hand, for the petrol or gasoline engine vehicles, so we do need incentives more than hybrid for ICE. However, if you look at the contents of the components, gasoline engine require less tariff impact. So in that sense, petrol engine, gasoline engine contribute better. So we need to strike a good balance between those two groups. And then recently, if we look at the transaction, one of the reasons why transaction price is deteriorating in the states is that the model type variants, which cost lower, are attracting customers. So because we do have both gasoline and hybrid, we need to strike a good balance. And then we need to, well, survive through this transition period between those different models using those good mix. Okay. Thank you very much.
So on our part, uh, we are—we will be, uh, getting into the transition period for different models, uh, competitors who are going to come up with, uh, new models. So, we need to kind of maybe build up, spend some more incentives, but, uh—incentives, sorry—uh, the hybrid, uh, requires lower, relatively lower incentive compared to petrol engine. But in the future, we might have to spend some more incentives in the future. But on the other hand, for the petrol, the gasoline engine vehicles.
So, we do need incentives—more than hybrid.
For, I see how if you look at the contents,
Uh, of the components, uh, gasoline engine require, uh, less tariff impact. So in that sense, uh, petrol engine, gasoline engine contribute better.
So, we need to strike a good balance between those two groups.
And then recently, if we look at the transaction and—one of the reasons why transaction prices are deteriorating in the States is that the model type of variants, which cost lower, are attracting our customers. So, because we do have both gasoline and—
[Analyst]: Thank you very much, Ms. Fujimura. So we're due to our time. The next question will be the last one for the day. Mr. Tsurumi from Nihon Keizai Shimbun, please. はい。Can you hear me? Please. すみません。ちょっとネットの環境が。Sorry about my internet connection, but. すみません。画面が出てないと思うんですけど、すみません。質問してください。And。四輪事業についてのですね、先ほどの。And earlier, you talked about the alliance with Nissan. And based on the reports, the models in the US with Nissan and part train commodization, so forth, you talked about that earlier. And what is the progress today? Are there any updates for us as much as you could share with us? That is all from me. Thank you for your question. So in conclusion, there is no specific information I can share with you today. But with Nissan, as I said earlier, in many different fields or areas, we try to explore different possibilities.
And the hybrid, we need to strike a good balance, and then we need to, uh, well, survive through this transition period between those different models using that, uh, using that good mix, okay? Thank you very much. Thank you very much, Miss Fuji. So due to time, the next question will be the last one for the day.
Please.
Hey, can you hear me, please? Uh, sorry about my internet connection, but, um, my vision—sorry, and—
And, uh, based on the reports, uh, the, uh, models in the, uh, US, uh, with Nissan and the, uh, part trained combination. So, both, uh, you talked about earlier and, uh, what is the progress today? Are there any updates, uh, for us, as much as you could share with us?
That is all from me. Thank you for your question. So, in conclusion, uh, there is no specification like I shared with you today. But with Nissan, as I said earlier,
[Analyst]: And as you said, the complementary supply of the models or production, the models from each other, if those are complementary to the other company, we could look for the possibility. And also one company produces a model of cars and then provides or makes supplies. We have discussion about it. However, we have not decided on any specific plans yet. We simply continue our discussion. And then, as I said earlier, the commoditization of this software or architectures, such topics, of course, one of the discussion topics for the development are. However, both of us have major autonomy in individual projects. Therefore, it is not yet the time to make a conclusion yet. But we continue to discuss positively with each other. So once any output or plans are solidified, we will make sure that we will share with you. Thank you very much. That is all from me.
Uh, in many different fields or areas, we, uh, try to explore, uh, different possibilities. And, uh, as you said, uh, uh, the, uh, complementary or supply of the models, or production.
Uh, the models from each other. Uh if uh those are complimentary to the other company, we could uh, look for the possibility and also uh 1 company produce a model uh of cars and then provide or make supplies. Uh we have discussion about it. However we have not decided on any uh, specific plans. Yet we simply continue our discussion. And then uh, as I said earlier, the colonization of this software for architectures,
Uh, such, uh, topics, uh, of course, uh, one of the, uh, discussion topics, uh, for the development.
However, um, both of us, uh, have a, a major progress in individual projects. Therefore, it is not, uh, yes. Uh, uh, there are a time to make a conclusion yet, but, uh, we continue to discuss positively with each other. So, uh, once, uh, any output or plans, uh, so that you find, we will make sure that we will share with you.
[Analyst]: Thank you. Thank you very much. はい。ありがとうございました。 Thank you. これではこれを。 So now that concludes our press conference for the business performance results. And those materials and handouts are available from our website of HONDA. Thank you very much for your participation, everyone. Thank you.
Thank you very much. That is all from me. Thank you.
Thank you very much. Thank you. So now that concludes our press conference for the, uh, business, uh, performance results, and, uh, those materials, uh, for and handouts are available from our website of Honda. Thank you very much for participation, everyone. Thank you.
