Honda ends car sales in South Korea by 2026
Japanese automaker Honda announced on Thursday that it will stop selling cars in South Korea by the end of 2026. The decision was driven by significant losses the company has faced as a result of a reassessment of its electric vehicle strategy.
History of Honda’s operations in South Korea
Honda, recognized worldwide, entered the South Korean market in 2002 selling motorcycles, and began selling cars in 2004 through its subsidiary Honda Korea, based in Seoul. To date, Honda Korea had 84 employees. The company reaffirmed that motorcycle sales will continue despite the end of car sales.
Rationale for discontinuing sales
In a press release, the automaker explained that the decision to discontinue car sales in the country was made “in view of changes in the landscape of the global and South Korean automotive markets.” Honda also noted that the choice was the result of “careful consideration,” with the goal of concentrating corporate resources and strengthening its competitiveness over the medium and long term.
After-sales services will continue
The company said that even after car sales end, it will continue to offer after-sales services, including vehicle maintenance and parts supply, ensuring support for customers who already own the brand’s vehicles.
Performance in the South Korean auto market
Honda currently sells models such as the Accord sedan and the CR-V SUV in the country. However, South Korea’s auto market is dominated by local automakers Hyundai Motor and Kia, which together account for about 90% of the sector. In the fiscal year ended March 2026, Honda sold just 1,458 vehicles in South Korea, a 44% drop from the previous year, according to data from Tokyo-based automotive research firm MarkLines.
Changes in electric vehicle strategy
In 2021, Honda set an ambitious goal for zero-emission electric vehicles and fuel cell vehicles to account for 100% of its new car sales around the world by 2040. Last month, however, the automaker decided to cancel the development of three electric vehicle models planned for North America. The change was attributed to difficulty adapting to revisions of electric vehicle support policies implemented under the administration of former president of the United States Donald Trump, as well as weak market demand.
Worrying financial forecasts
Honda estimates that its total expenses and losses could reach up to 2.5 trillion yen (approximately US$ 15.7 billion) through the fiscal year ending March 2027. In addition, the automaker announced that it expects to post a net loss of up to 690 billion yen for fiscal year 2025, which ends on March 31, 2026. This forecast is a sharp revision from its previous expectation of a net profit of 300 billion yen, marking the company’s first net loss since it went public in 1957.
Reasons for the deterioration in profitability
In a statement released last month, Honda attributed the deterioration in the profitability of its automobile segment to changes in the internal combustion engine and hybrid electric vehicle categories resulting from US government policy changes. The company also pointed to “a decline in the competitiveness of Honda products in Asia,” a result of allocating more resources to electric vehicle development.
Suspension of partnerships and projects
Honda recently decided to halt development of the Afeela electric vehicle, which was being developed in partnership with Sony Group. This decision reflects a deeper review of the automaker’s business strategy, covering not only its product lineup but also its sales regions.
Earnings announcement
Honda CEO Toshihiro Mibe is scheduled to present the company’s financial results for the fiscal year just ended and discuss future initiatives at an event set for May 14.
