Honda Motor Co announced plans to ramp up research and development (R&D) spending by nearly a quarter in the current financial year to enhance its competitive position in hybrid and other electrified vehicles. The Japanese automaker anticipates a 2.8% increase in operating profit for 2024/25, buoyed by robust sales performance, particularly in the United States.
In a bid to bolster shareholder value, Japan’s second-largest automaker by volume unveiled a share buyback program worth up to 300 billion yen ($1.93 billion) following better-than-expected fourth-quarter earnings results. A weaker Japanese yen and strong sales of hybrid models further bolstered Honda’s profitability.
The company projects full-year operating profit to reach 1.42 trillion yen, exceeding analysts’ average estimate of 1.39 trillion yen. Honda, focusing on hybridization as part of its electrification strategy, plans to allocate 1.19 trillion yen for R&D efforts this year, marking a 23% increase from the previous year.
CEO Toshihiro Mibe emphasized Honda’s ambition to produce 2 million hybrid models annually by 2030, underscoring the importance of strategic investments in achieving this target.
Despite challenges in the electric vehicle (EV) segment, Honda remains optimistic about its future plans. The automaker is in discussions with Nissan Motor regarding a potential collaboration on EV component production, aiming to strengthen its position in the rapidly evolving automotive landscape.
While Honda experienced a 17% sales surge in the U.S., its largest overseas market, during the January-March period, sales in China declined by over 6%. To address market dynamics, Honda intends to establish an EV production hub in Ontario, Canada, and introduce six EV models under the Ye brand in China by 2027.