A：The management decision to revise the forecast in the fiscal year ending March 21, 2026, was prompted by the drastic change in the business environment, including the US regulatory environment, environmental regulations in European countries, the discontinuation of EV incentives, increased competition from other automakers, and the difficulty in ensuring profitability for EV models.

A：More resources were allocated to the EV business after a comprehensive study of various factors such as US IRA incentives and the projected profitability of their internal combustion engine (ICE) and hybrid models. Honda aimed to prepare for widespread adoption of EVs and to fulfill its responsibility to achieve carbon neutrality.

A：Honda faced challenges in its automobile business due to difficult earnings, the decline in profitability of gasoline and hybrid models due to newly imposed tariffs, and a decline in the demand for EVs, particularly in the US market. The company's inability to deliver products with better value for money resulted in a decline in competitiveness.

A：The decision to cancel the market launch and development of the Honda Z Su UV, Honda Z Saloon, and Acura R SVR S X was made to achieve carbon neutrality by 2050. Honda recognized the tough earnings situation due to the business environment and the decline in profitability, and believed that introducing these models without a viable business outlook might result in early production discontinuation, causing inconvenience for customers and damage to the brand.

A：Honda anticipates significant financial implications, including impairment and write-off losses of about 2.3 trillion yen, of which approximately 1 trillion yen will be recorded in the fiscal year forecast announced on February. An estimated additional 110 billion to 150 billion yen in operating losses and losses on investments using the equity method in China and other regions are also expected. The remaining losses of about 1.2 trillion yen are planned to be recorded in the first part of the next fiscal year.

A：Honda plans to reallocate its resources away from the previously focused EV business and towards the introduction of new hybrid models to improve immediate profitability and strengthen the foundation of the automobile business. They will maintain investment discipline for EVs while laying the groundwork for future growth. Honda will also focus on India as a key region for strengthening initiatives. In the US market, new hybrid models will be introduced, and the next generation hybrid system will be applied to key models to improve the model mix and grow operations in volume and profit. In Japan, the next generation of AWD (All Wheel Drive) system will be introduced to align with the unique driving performances of Japanese customers and to popularize the technology in an affordable and competitive price range to elevate the product lineup and strengthen the Honda brand.

A：Honda is planning to handle the impacts of trade policies and supply chain challenges by enhancing local procurement, especially for next-generation hybrid models launched from 2027 onwards. The company is also discussing converting battery production lines to hybrid battery lines at the joint venture company LH battery to produce hybrid batteries. Financially, Honda aims to achieve a fixed cost structure appropriate for the business scale by thoroughly controlling expenditures and having a strategy to adjust investment caps based on earnings.

A：The new strategy for investment decisions involves tightening criteria for setting investment caps based on earnings and making more disciplined, selective, and focused investment choices. The company will continue monitoring investment performance and past impairments. Financially, Honda aims to maintain a stable profit generation and transition to a stable profit business structure.

A：The introduction of new models in the US and next-generation hybrid models globally is expected to have a positive effect on the company's profitability across multiple models and for the entire fiscal year. These efforts are expected to steadily regain the inherent earnings power of the automobile business.

A：To improve the company's earnings structure, Honda is focusing on increasing product competitiveness and optimizing the model mix, which will strengthen the earnings structure both in volume and profitability. This will contribute to transitioning to a stable profit-generating business structure.

A：Honda remains committed to its carbon-neutral target and will not give up on this social responsibility. However, due to various factors, including a slowing EV market, the company is reassessing its strategies. The previously set script target will be difficult to achieve, and the long-term roadmap and strategy will be revised with new details to be presented at a business update in May.

A：The discontinuation of the Ly Models development was prompted by the slow growth of the Eev and the decision to focus on Eev S within six months. Other factors include the removal of greenhouse regulations, decline in consumer sentiment, production volume drops, large incentives needed, negative gross profit, and uncertainty about whether the model cancellation would cover costs and impact future direction.

A：The Honda Zero Alpha model will continue to be developed and mass-produced because its main markets are India, Japan, and other Asian regions, where there are profitability expectations despite changes in the environment surrounding those regions.

A：Honda is planning to compete against new Chinese players by drastically shortening the development period and improving production efficiency. These measures are part of a broader plan to change the structure of the automotive business, which will be detailed in May.

A：Honda's plan regarding the Ly models in North America is to cancel their development due to the slowing down of the business in the US market, which is below expectations. However, the Honda Zero Alpha series will continue as it targets different markets like India, Japan, and some Asian markets where profitability is still anticipated.

A：Honda will account for the impairment in the 2.5 trillion yen breakdown by writing off the development assets and dedicated facilities, and providing compensation to suppliers due to the cancellation of the script models. They will also revalue the investment in their Chinese business, and adjust the share of investment account on their balance sheet accordingly, with the impairment charges being recognized over the next two fiscal years.

A：Noncash items and losses related to the fiscal year amount to 1.7 trillion yen, which are cash items. Honda anticipates that these losses, especially in North America, can be written off. The company's gross cash balance is at 4 trillion yen, and despite this year's losses, Honda expects to generate operating cash flow at par with the previous year next fiscal year, maintaining a solid balance sheet. Honda plans to focus on maintaining stable dividends, with the final financial results set to be announced in May.

A：Honda anticipates approximately 1.2 trillion yen in cash outflow for supplier compensation related to the discontinuation of models related to the Ly script in China. This is an estimated maximum amount of compensation that Honda has rationally determined to pay to its suppliers.

A：Honda confirmed that discussions regarding the Sony Honda project have started and are ongoing among shareholders. However, no decision has been made yet regarding the future of this project. Honda asked for continued concern and updates on this matter until May.

A：Honda perceives the recent financial crisis as a significant event, being the first time they have posted a deficit since shifting to a new accounting standard. The company does not attribute the losses to governance issues but acknowledges the impact of strict regulations, such as those in California, and the challenging market environment. Compared to competitors, Honda experienced greater losses likely due to the significant investment needed to comply with the strict regulations and the unexpected downturn in the electric vehicle (EV) market in the United States, which resulted in lower sales than anticipated. This combination of factors led to the large sum of losses reported.