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Honda Motor Co. on Friday said it would ramp up its spending on research and development of electrified vehicles in 2024 and issue its largest-ever stock buyback after reporting record profits.
The Japanese automaker reported an operating profit of 1.38 trillion yen ($8.8 billion) for the fiscal year that ended in March, up 77% from the previous year. Profits for the three month period that ended in March grew more than six-fold year-over-year to 305.6 billion yen ($1.9 billion).
Honda said it expects to record an operating profit of 1.42 trillion yen ($9.1 billion) for its fiscal year, which started on April 1 and ends on March 31, 2025. That’s above its February projection of 1.25 trillion yen ($8 billion). Japan’s second-largest automaker will also repurchase as much as 300 billion yen, about 3.7% of its shares, as it faces pressure to increase shareholder returns.
Honda, like fellow Japanese carmaker Toyota Motor, has been slow to dig into the electric vehicle market and relied heavily on hybrid vehicles. The automaker aims to spend 1.19 trillion yen ($7.6 billion) for research and development this year, a 23% year-over-year increase.
“Our current plan is to create an environment that allows us to produce 2 million hybrid models in a year by 2030, and we have been planning our business strategy taking into account necessary investment,” CEO Toshihiro Mibe told reporters Friday, Reuter reports.
While also working on hybrids, the automaker is advancing its electrification goals. Honda plans to spend $11 billion to develop its EV supply chain in Canada and begin manufacturing its first U.S-made EVs in Marysville, Ohio, in 2025. It aims to sell only EVs in North America by 2040 and reach carbon neutrality by 2050; Mibe told reporters Friday that the recent slowed growth in EV adoption will not affect those goals.
Honda is also exploring a strategic partnership with fellow Japanese automaker Nissan Motor Co. to create “core components” related to EVs. Mibe said that discussions about the partnership should come to a close soon, adding that more information on EVs and investments will be announced next week. Both companies this week reported strong sales in most global markets, with China a notable exception.