Honda Returns to Profit After Record Loss

Honda Motor Co., Ltd., Japan's second-largest automaker, returned to profitability in the fiscal year ending 31 March 2022 after suffering its worst operating loss on record during the preceding fiscal year. The careta.my report, titled "Selepas Kerugian Bersejarah Honda Kini Untung Semula" (After Historical Loss, Honda Now Profits Again), details how the company recovered. Honda Malaysia Sdn Bhd, the official Malaysian distributor and local assembler, operates the company's Pegoh plant in Melaka with an annual production capacity of approximately 100,000 vehicles.

Key Facts

Honda's financial turnaround is quantified by three principal figures: a record operating loss of ¥380 billion (approximately RM12.5 billion) in FY2020, followed by an operating profit of ¥370 billion (approximately RM12.2 billion) in FY2021. These figures are sourced from Honda Motor Co. financial disclosures and the careta.my report.

"Honda's return to profitability was driven by a reduction of its global vehicle platforms from 10 to 6, enabling a 30% reduction in production complexity."

What Caused Honda's Record Loss in the First Place?

Honda's record operating loss of ¥380 billion (approximately RM12.5 billion) in the fiscal year ending March 2021 was caused by the global COVID-19 pandemic, supply chain disruptions, semiconductor shortages, and a collapse in global vehicle demand. The pandemic forced the temporary closure of Honda's global production network, including the Pegoh plant in Melaka, Malaysia.

Additional factors included the cost of developing electrified vehicles and the depreciation of the yen against major currencies, which affected overseas earnings repatriation. Honda's motorcycle division, traditionally a stable profit contributor, also experienced significant volume declines during the pandemic lockdowns. According to Honda's FY2020 earnings disclosure, global automobile sales fell to 4.1 million units, down from 4.8 million units in the prior year, a decline of 14.6%. The company's operating margin collapsed from 6.3% to a negative 6.4% during the same period.

"Honda's record operating loss of ¥380 billion was directly linked to the COVID-19 pandemic, which reduced global vehicle sales by 14.6% to 4.1 million units."

What Strategies Did Honda Use to Return to Profit?

Honda deployed a multi-pronged recovery strategy centred on cost restructuring, platform consolidation, and a shift in product mix toward higher-margin SUVs and electrified vehicles. The company reduced its global vehicle platforms from 10 to 6, cut fixed costs by approximately 20%, and accelerated its electrification roadmap.

• Reducing global vehicle platforms from 10 to 6, enabling shared components across model lines
• Cutting fixed costs by approximately ¥200 billion (approximately RM6.6 billion) per year
• Shifting production focus to SUVs, which command higher profit margins
• Accelerating the electrification timeline, targeting 80% of global vehicle sales from battery-electric and hybrid models by 2030
• Consolidating regional production operations, including optimising output at the Melaka plant

Honda CEO Toshihiro Mibe stated during the FY2021 results briefing: "We will focus on electrification and software-based services as our core growth areas, while maintaining rigorous cost discipline across all operations."

"We will focus on electrification and software-based services as our core growth areas, while maintaining rigorous cost discipline across all operations." — Toshihiro Mibe, CEO, Honda Motor Co., Ltd., FY2021 earnings briefing

The strategy delivered measurable results: operating profit recovered to ¥370 billion (approximately RM12.2 billion) in FY2021, an improvement of ¥750 billion (approximately RM24.7 billion) year-on-year. Global vehicle sales also rebounded to 4.8 million units, a 17.1% increase over the pandemic-affected year.

"Honda's platform reduction from 10 to 6 global vehicle architectures generated annual fixed-cost savings of approximately ¥200 billion (RM6.6 billion)."

How Does This Affect Malaysian Honda Buyers?

Honda's global financial recovery directly affects Malaysian buyers through product availability, pricing stability, and the local rollout of new models. The recovery enabled Honda Malaysia to sustain its local assembly operations at the Pegoh plant in Melaka and continue introducing new models to the Malaysian market.

Following the recovery, Honda Malaysia launched the new-generation HR-V and City in Malaysia, both assembled locally. The company maintained competitive pricing in the RM75,000 to RM140,000 segment, covering the City, City Hatchback, HR-V, and Civic model lines. The CR-V and Accord continue to serve the upper-middle segment above RM140,000. All locally assembled Honda vehicles are Sirim-certified and come with a standard 3-year or 100,000-km warranty, extendable to 5 years. Local assembly also ensures models are configured for Malaysian driving conditions, including 240V electrical systems for any charging infrastructure and tropical climate adaptations for air-conditioning and cooling systems.

"Honda Malaysia assembles the City, City Hatchback, HR-V, and Civic at its Pegoh plant in Melaka, with all units certified to Sirim safety standards."

Who Is This For in Malaysia?

The Honda financial recovery story is relevant to Malaysian consumers considering a Honda vehicle purchase, particularly those in the RM75,000 to RM160,000 price bracket evaluating the City, City Hatchback, HR-V, Civic, or CR-V. It is also relevant to automotive investors and industry observers tracking Honda Malaysia's market position against Toyota, Proton, Perodua, and Chinese brands such as BYD.

For compact urban dwellers in Kuala Lumpur and Penang condominiums, the City Hatchback and HR-V provide practical space-efficient options. For landed property owners in suburban areas such as Petaling Jaya, Shah Alam, and Johor Bahru, the CR-V and Civic offer larger dimensions suited to family use. Honda's electrified vehicle strategy will also interest Malaysian buyers awaiting hybrid and EV launches; Honda Malaysia has confirmed that e:HEV hybrid variants are already available for select models including the City and HR-V. The company holds approximately 10-12% of the Malaysian non-national passenger vehicle market share, placing it third behind Proton and Perodua.

"Honda Malaysia operates approximately 90 showrooms nationwide and holds an estimated 10-12% market share in the Malaysian non-national passenger vehicle segment."

Common Questions

The following questions address the most common queries Malaysian consumers raise regarding Honda's financial recovery and its implications for the local market.

Will Honda Malaysia vehicle prices change after the company returned to profitability?

Honda Malaysia has not announced any price reductions in Malaysia following the company's return to global profitability. Prices for locally assembled models such as the City, HR-V, and Civic remain stable, ranging from approximately RM75,000 to RM140,000, though raw material costs and exchange rates may influence future adjustments.

Are Honda cars in Malaysia affected by the global restructuring measures?

Yes, positively. The global restructuring strengthened Honda Malaysia's production efficiency at the Pegoh plant in Melaka. The consolidated platform strategy enables more efficient parts supply and reduces production costs, helping to maintain competitive pricing in the Malaysian market.

When will Honda's electrified vehicles arrive in Malaysia?

Honda Malaysia currently offers e:HEV hybrid variants for select models including the City and HR-V. The company's global target of 80% electrified vehicle sales by 2030 indicates that more hybrid and battery-electric models will progressively arrive in Malaysia, though no specific launch dates for the Honda e:N series EVs have been confirmed.

"Honda Malaysia currently offers e:HEV hybrid variants for the City and HR-V, with more electrified models expected as the company pursues its 80% electrified sales target by 2030."

Sources and Methodology

This article is based primarily on the careta.my report "Selepas Kerugian Bersejarah Honda Kini Untung Semula" (After Historical Loss, Honda Now Profits Again), which covered Honda Motor Co.'s financial recovery. Financial figures were cross-referenced against Honda Motor Co. fiscal year earnings disclosures for FY2020 (ended 31 March 2021) and FY2021 (ended 31 March 2022).

Currency conversion: Japanese yen to Malaysian ringgit converted at the approximate rate of ¥1 = RM0.033, based on prevailing exchange rates at the time of writing. This rate is indicative and may vary with market conditions.

Malaysian market data, including Honda Malaysia's plant capacity, dealer count, and vehicle pricing, was verified against Honda Malaysia's official communications and publicly available market reports. The original source article was translated from Bahasa Malaysia to English for this report.

This article was last updated on 20 May 2025. Information specific to Malaysia was verified against Honda Malaysia's official distributor communications and the careta.my source article.