Honda reported a 61% drop in third-quarter profit, hit by U.S. tariffs and restructuring costs tied to its electric-vehicle (EV) business, marking another setback for automakers facing cooling EV demand.

Operating profit for October–December fell to 153.4 billion yen ($987 million), missing analyst expectations of 174.5 billion yen.

The decline reflects a sharp slowdown in North American EV demand, fading incentives, and one-off EV-related costs, including asset write-downs. U.S. tariffs further reduced profits by 280 billion yen over nine months.

Honda’s automobile business recorded a loss for the period, while its motorcycle segment remained strong, particularly in India and Brazil.

Honda is lagging competitors in China on pricing and software, prompting a fundamental restructuring to improve competitiveness amid rising global EV competition.

Despite the challenges, the company maintained its full-year operating profit forecast of 550 billion yen, citing offsetting factors like favourable exchange rates and stronger-than-expected vehicle sales.