VALUATION HIGHLIGHTS

1. Vehicle Leases & Loans constitute 16% of the Trefis price estimate for Honda's stock.
2. Automobiles constitute 9% of the Trefis price estimate for Honda's stock.
3. Motorcycles constitute 5% of the Trefis price estimate for Honda's stock.

WHAT HAS CHANGED?

Latest Earnings - Q3 FY'26

Honda Motor reported fiscal Q3 2026 EPS of $0.76, beating estimates but down from $1.31 a year ago. Revenue fell 4% year over year to $34.7 billion. The automobile segment was the main drag, with revenue down 8.8% and swinging to an operating loss, reflecting weaker volumes and margin pressure. Motorcycles remained a bright spot, with revenue up 13%, although profit slipped slightly.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

• Honda's Automobile Units Sold: Honda's auto sales have declined from almost 4.8 million units in FY'20 to just about 3.7 million in FY'23, although it recovered to 4.1 million in FY'24. The metric stood at 3.7 million units in FY'25. Trefis expects the metric to gradually rise to around 4 million units by FY'32. However, if volumes remain roughly flat, our price estimate could see a 5% downside.

BUSINESS SUMMARY

Honda is one of the world's ten largest automakers and the largest motorcycle producer. In addition to producing Honda-branded vehicles (cars, vans, SUVs, trucks) and motorcycles, the company is also a leading producer of powersport vehicles (ATVs, watercraft) as well as other motor-based products (generators, pumps). Honda also provides financing through leases and loans for its products. Honda's financing business is a significant contributor to the company's profits. Honda is headquartered in Tokyo, Japan.

SOURCES OF VALUE

High gross margins for automobile business

According to our estimates, Honda's gross margin for its vehicle business is close to 20%, ahead of many of its peers.

KEY TRENDS

1. Focus On Electric Vehicles

Honda Motors is taking concrete steps to build strong electric vehicle capabilities. The company has been investing in EV development for the last few years. For instance, it signed a collaboration agreement with General Motors to develop affordable electric vehicles based on a new global platform. The first vehicles will likely roll out in 2027, with prices likely to start below $30,000.