UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)  OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from    to    

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file number 1-7628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Exact name of Registrant as specified in its charter)

HONDA MOTOR CO., LTD.

(Translation of Registrant’s name into English)

JAPAN

(Jurisdiction of incorporation or organization)

No. 1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Address of principal executive offices)

Ryosuke Niwa

+81-3-5412-1134, prj_h_ir2@hm.honda.co.jp, No. 1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock* American Depositary Shares**	HMC	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Title of each class	Outstanding as of March 31, 2024***
Common Stock	4,828,907,376****

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act, Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such file). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

* Not for trading purposes, but only in connection with the registration of American Depositary Shares, each representing three shares of Common Stock.

** American Depositary Receipts evidence American Depositary Shares, each American Depositary Share representing three shares of Common Stock. 

*** Unless otherwise indicated in this Form 20-F, “outstanding shares” excludes the number of shares held by the BIP Trust (as defined under Item 6.B. “Compensation-The Board Incentive Plan”).

**** Shares of Common Stock include 259,782,129 shares represented by American Depositary Shares. 

PART I

Item 1. Identity of Directors, Senior Management and Advisers	1
Item 2. Offer Statistics and Expected Timetable	1
Item 3. Key Information	1
A. [Reserved]	1
B. Capitalization and Indebtedness	1
C. Reason for the Offer and Use of Proceeds	1
D. Risk Factors	1
Item 4. Information on the Company	8
A. History and Development of the Company	8
B. Business Overview	8
C. Organizational Structure	52
D. Property, Plants and Equipment	53
Item 4A. Unresolved Staff Comments	55
Item 5. Operating and Financial Review and Prospects	55
A. Operating Results	55
B. Liquidity and Capital Resources	75
C. Research and Development	78
D. Trend Information	83
E. Critical Accounting Estimates	83
Item 6. Directors, Senior Management and Employees	84
A. Directors and Senior Management	84
B. Compensation	105
C. Board Practices	112
D. Employees	112
E. Share Ownership	113
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation	115
Item 7. Major Shareholders and Related Party Transactions	115
A. Major Shareholders	115
B. Related Party Transactions	115
C. Interests of Experts and Counsel	116
Item 8. Financial Information	116
A. Consolidated Statements and Other Financial Information	116
B. Significant Changes	117
Item 9. The Offer and Listing	117
A. Offer and Listing Details	117
B. Plan of Distribution	117
C. Markets	117
D. Selling Shareholders	117
E. Dilution	117
F. Expenses of the Issue	118
Item 10. Additional Information	118
A. Share Capital	118
B. Memorandum and Articles of Association	118
C. Material Contracts	119
D. Exchange Controls	119
E. Taxation	119
F. Dividends and Paying Agents	123
G. Statement by Experts	123

H. Documents on Display	124
I. Subsidiary Information	124
J. Annual Report to Security Holders	124
Item 11. Quantitative and Qualitative Disclosure about Market Risk	124
Item 12. Description of Securities Other than Equity Securities	124
A. Debt Securities	124
B. Warrants and Rights	124
C. Other Securities	124
D. American Depositary Shares	124
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies	127
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds	127
Item 15. Controls and Procedures	127
Item 16A. Audit Committee Financial Expert	128
Item 16B. Code of Ethics	128
Item 16C. Principal Accountant Fees and Services	128
Item 16D. Exemptions from the Listing Standards for Audit Committees	129
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	129
Item 16F. Change in Registrant’s Certifying Accountant	130
Item 16G. Corporate Governance	130
Item 16H. Mine Safety Disclosure	134
Item 16I. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections	134
Item 16J. Insider Trading Policies	134
Item 16K. Cybersecurity	134
PART III
Item 17. Financial Statements	136
Item 18. Financial Statements	136
Item 19. Exhibits	137

PART I

Unless the context otherwise requires, the terms “we”, “us”, “our”, “Registrant”, “Company” and “Honda” as used in this Annual Report each refer to Honda Motor Co., Ltd. and its consolidated subsidiaries.

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reason for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

You should carefully consider the risks described below before making an investment decision. If any of the risks described below actually occurs, Honda’s business, financial condition or operating results could be adversely affected. In that event, the trading prices of Honda’s common shares and American Depositary Shares could decline, and you may lose all or part of your investment. Additional risks not currently known to Honda or that Honda now deems immaterial may also harm Honda and affect your investment.

Geopolitical Risk

Honda conducts business operations in countries worldwide and is exposed to a variety of risks including changes in local laws and regulations, agreements, institutions, and business practices, such as tariffs, import and export regulations, and taxes, wars, terrorism, political uncertainty, worsening security situation, change in political regime and labor strikes in those countries or neighboring regions. If such unforeseeable events occur, and operations are delayed or suspended, including supply chain disruptions due to heightened political, military, or social tensions, Honda’s business and operating results could be adversely affected.

Particularly among them, Honda recognizes three major geopolitical risks: 1) economic security, 2) conflicts between nations or regional conflicts, and 3) laws and regulations concerning human rights.

Strategies for mitigating and reducing exposure to these geopolitical risks are gaining importance because these geopolitical risks have a significant effect on certain of Honda’s initiatives for its Five Key Themes described in Item 4. “Information on the Company—B. Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially”, particularly in realizing a zero environmental impact society, realizing a zero traffic collision society, the evolution of human capital management, and creation of innovative technologies.

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For the scale of business in each region that may be affected by such geopolitical risks in the future, see Item 5. “Operating and Financial Review and Prospects—A. Operating Results—Geographical Information Based on the Location of the Company and Its Subsidiaries.”

1. Economic Security

Many countries are tightening import and export controls and adopting policies to encourage the blocking of critical resources, components, and parts, as well as advanced technologies. Especially in 2024, there will be a series of elections in various countries, including one in the United States, that may result in policy changes. Changes in governmental policy concerning exports and imports could possibly result in stoppages or delays in Honda’s production activities or lead us to incur countermeasure costs associated with development, purchasing, sales, and other business activities, which could adversely affect Honda’s business and operating results.

2. Conflicts Between Nations or Regional Conflicts

The outlook for the international situation remains uncertain, including the situations in Ukraine and the Middle East. If new conflicts occur, these could possibly result in humanitarian crisis, material and property damage, and supply chain disruptions, not only in the countries and regions where they occur, but also in other countries, which could adversely affect Honda’s business and operating results.

3. Laws and Regulations Concerning Human Rights

Laws and regulations requiring companies to address human rights are being enacted in many countries, and the need to address human rights risks throughout the supply chain is growing rapidly. Failure to respond to such laws and regulations in a timely and appropriate manner could damage Honda’s brand image and social credibility, and result in stoppages or delays in Honda’s production activities or lead us to incur countermeasure costs associated with development, purchasing, sales, and other business activities, which could adversely affect Honda’s business and operating results.

Purchasing and Procurement Risk

Honda is aiming for sustainability in the procurement of good products at reasonable prices in a timely manner by purchasing raw materials and parts from numerous external suppliers. However, Honda still relies on certain suppliers for some of the raw materials and parts which it uses to manufacture its products. Honda’s ability to continue to obtain these supplies in an efficient manner at appropriate cost levels is subject to a number of factors, some of which are outside of Honda’s control. These factors include the ability of its suppliers to provide a continued supply of raw materials and parts and Honda’s ability to compete with other users in obtaining the supplies.

In case it becomes impossible to receive the supply of materials and parts from suppliers on a continuous basis, in case the prices of materials and parts rise, or in case of losing any key supplier, this could lead to delays in or the suspension of Honda’s manufacturing operations and a loss of Honda’s competitiveness, which could adversely affect Honda’s business and operating results.

Additionally, in case a quality-related issue occurs due to parts supplied by business partner, it may threaten the safety and security of our customers, damage Honda’s brand image, and potentially adversely impact Honda’s business and operating results.

For example, in response to increasing demand for semiconductors due to recovering economy after the spread of coronavirus disease 2019 (COVID-19), a shortage in the procurement of semiconductors has manifested for Honda, which has led to impacts such as suspensions or reductions in manufacturing of automobiles and motorcycles at some of Honda’s production bases in Japan and overseas. While the issue has been resolved as of the filing date of this Annual Report, prices are increasing or predicted to increase in the future for some of the materials and parts.

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Strategies for mitigating and reducing exposure to these purchasing and procurement risks are gaining importance because these purchasing and procurement risks have a significant effect on certain of Honda’s initiatives for its Five Key Themes described in Item 4. “Information on the Company—B. Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially”, particularly in realizing a zero environmental impact society, realizing a zero traffic collision society, and creation of innovative technologies.

Information Security Risk

Honda uses a wide range of information systems and networks relating to information services and driving support in its business activities and its products, including in areas managed by subcontractors. There is an increasing demand for software solutions, particularly in the areas of automated driving/advanced driver-assistance systems and other digital services, including the utilization of AI technologies.

The means of cyber-attacks that take place have become more advanced and sophisticated, targeting organizations worldwide. Moreover, cyber-attacks could also significantly affect Honda’s initiatives for its Five Key Themes described in Item 4. “Information on the Company—B. Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially”, particularly in realizing a zero traffic collision society and creation of innovative technologies. Accordingly, the strategies for mitigating and reducing exposure to this risk are gaining importance.

In addition, in recent years, personal information protection rules have been rapidly developed in countries worldwide. In creating Honda’s initiatives for the creation of new value, measures protecting personal information are also gaining importance due to possible differences in the amount and quality of the personal information handled in comparison to existing operations.

There is a possibility that, in addition to cyber-security risk, any equipment malfunction, any management deficiency or human error at Honda or any of our business partners or subcontractors, or any natural disaster, infrastructure failure or any other unforeseen circumstances could also result in the suspension of important operations and services at Honda, leakage of confidential or personal information, inappropriate processing of documents and information, or the destruction or falsification of important data.

If such an event occurs, Honda’s business and operating results could be adversely affected in terms of damage to its brand image or social reputation, liability to customers or parties affected, payment of financial penalties, delays in or suspension of Honda’s manufacturing operations, and a loss of Honda’s competitiveness.

Business Alliances and Joint Ventures Risk

Honda engages in business operations through alliances and joint ventures with other companies in expectation of synergy effects and increased efficiency, or to meet the requirements of the countries in which business development is being undertaken.

As Honda advances its initiatives for Five Key Themes described in Item 4. “Information on the Company—B. Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially”, particularly in realizing a zero environmental impact society, realizing a zero traffic collision society, and creation of innovative technologies, the utilization of alliances, joint ventures, and other forms of partnership are gaining importance.

If disagreements among partners regarding business, leakage of profit or technology, delays in decision-making or poor operating results at business partners occur in the context of an alliance or joint venture, or if conditions to an alliance or joint venture are changed or cancelled, it may have an adverse effect on Honda’s business and operating results.

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Environmental Risk

With business operations in countries worldwide, Honda recognizes wide-ranging potential risks related to environmental issues, as exemplified by the risks concerning climate change, resource depletion, air pollution, water pollution, and biodiversity, among other issues, and Honda is subject to wide-ranging policies and regulations covering these issues.

For the policies and regulations concerning climate change and fuel efficiency and exhaust gas in particular, countries worldwide have implemented or are planning for their revisions around the world. Depending on the trends for the revisions and what the substance of the revised regulations, Honda’s measures in response and related expenses could possibly weigh on its production, development, purchasing and sales activities, etc., in the Motorcycle, Automobile, Power products and other businesses operations. This could adversely affect Honda’s business and operating results. Moreover, these risks could also significantly affect Honda’s initiatives for its Five Key Themes described in Item 4. “Information on the Company—B. Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially”, particularly in realizing a zero environmental impact society and creation of innovative technologies. Accordingly, the strategies for mitigating and reducing exposure to this risk are gaining importance.

For information on risks and opportunities related to climate change, please refer to “Climate Change-related Disclosures (Response to the TCFD Recommendations)” in Item 4. “Information on the Company—B. Business overview—Concepts and Approaches to Sustainability”.

Intellectual Property Risk

Honda owns or otherwise has rights in a number of patents and trademarks relating to the products it manufactures, which have been obtained over a period of years. Honda has designated carbon neutrality of power units, energy management systems, resource circulation, automated driving/advanced driver-assistance systems, and internet of things/connected technology as key focus areas in order to support the evolution to an enterprise capable of forging new growth trajectories and fostering innovative value creation. Related patents and trademarks could significantly affect Honda’s initiatives for its Five Key Themes described in Item 4. “Information on the Company—B. Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially”, particularly in realizing a zero traffic collision society and creation of innovative technologies. Accordingly, the strategies for mitigating and reducing exposure to these risks are gaining importance.

The inability to protect its intellectual property generally, the illegal infringement of some or a large group of Honda’s intellectual property rights that may cause declines in Honda’s competitive advantage, or the suspension of manufacturing and/or sales activities and the payment of large amounts of damages as a result of lawsuits on infringement of patent rights and license fees, could have an adverse effect on Honda’s business and operating results.

Natural Disasters Risk

The suspension and delay in business activities such as production, development, purchasing and sales as results of damage caused to Honda’s operation sites and employees by earthquakes, floods, windstorms, infectious diseases, and other natural disasters may adversely affect Honda’s business and operating results.

Also, if any of Honda’s business partners suffer any such damage, or if there is any disruption of the infrastructure due to a natural disaster, this may adversely affect Honda’s business and operating results. For example, the 2024 Noto Peninsula Earthquake occurred in January 2024 affected our business partner that led into reduction of automobiles production in some of factories in Japan.

In addition, under the effects of climate change and other factors, weather-related disasters have intensified and have become more frequent in various countries worldwide, and it is projected that this trend could continue going forward. As a result, these disasters may adversely affect Honda’s business and operating results.

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Financial & Economic Risk

1. Economic Trends and Economic Fluctuations

Honda conducts business operations in countries throughout the world, with manufacturing operations and sells products in various regions and countries. These business activities may be affected by economic slowdowns, economic fluctuation, or other factors, which could result in decreased sales due to market contractions, increases in component procurement prices and product sales prices, higher credit risk for Honda’s business, and higher financing interest rates, among others. Accordingly, these changes may have an adverse effect on Honda’s business and operating results.

2. Currency Fluctuations

Honda has manufacturing operations throughout the world, including Japan, and exports products and components to various countries. Honda purchases materials and components and sells its products and components in foreign currencies. Therefore, currency fluctuations could affect Honda’s pricing of materials purchased and products sold. Accordingly, currency fluctuations may have an adverse effect on Honda’s business and operating results.

Relating to Industry Market Risk

Honda conducts its operations in Japan and countries throughout the world. Extended economic slowdown, recession, changes in consumer preferences and needs, rising fuel prices, financial crisis, and increases in product prices due to increases in material costs or decreases in supply volume may cause decline in market demands and intensify competition with other companies that could trigger a decline in demand for Honda’s products that may adversely affect Honda’s business and operating results.

Honda’s Financial services business conducts business under highly competitive conditions in an industry with inherent risks

Honda’s Financial services business offers various financing plans to its customers designed to increase the opportunity for sales of its products. However, customers can also obtain financing for the lease or purchase of Honda’s products through a variety of other sources that compete with our financing services, including commercial banks and finance and leasing companies. The financial services offered by Honda involve credit risk as well as risks relating to lease residual values, cost of capital and access to funding. Competition for customers and/or these risks may adversely affect Honda’s business and operating results.

Legal Risk

Honda could be subject to lawsuits, various investigations and legal proceedings under relevant laws and regulations of various jurisdictions. A negative outcome in any such current or future legal proceedings brought against Honda could adversely affect Honda’s business and operating results.

Honda is subject to risks relating to its obligations to provide post-employment benefits

Honda has various pension plans and provides other post-employment benefits, in which the amount of benefits is basically determined based on the level of salary, service years, and other factors. Contributions are also regularly reviewed and adjusted as necessary to the extent permitted by laws and regulations. Defined benefit obligations and defined benefit costs are based on assumptions of a variety of factors, including the discount rate and the rate of salary increase. Changes in assumptions could affect Honda’s defined benefit costs and obligations, including Honda’s cash requirements to fund such obligations in the future, which could adversely affect Honda’s operating results.

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Honda’s success depends in part on the value of its brand image, which could be diminished by product defect

One of the important factors behind corporate sustainability is trust and support for the Honda brand from our customers, society and the communities in which Honda conducts business operations. In order to support this brand image, Honda endeavors to gain the trust of society in all types of corporate activities, including ensuring product quality and compliance with laws and regulations, conducting risk management, and enhancing internal controls related to corporate governance. However, if for some unforeseeable reason the Honda brand image is damaged or Honda is unable to communicate information in a timely manner and deal with such information appropriately, this could adversely affect Honda’s business and operating results. This brand image related risk could also significantly affect Honda’s initiatives for its Five Key Themes described in Item 4. “Information on the Company—B. Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially”, particularly in brand value enhancement. Accordingly, the strategies for mitigating and reducing exposure to this risk are gaining importance.

We have confirmed that there had been some inappropriate cases relating to the certification test when applying for type designation for four-wheeled vehicles sold in the past, and reported this to Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) on May 31, 2024. We will continue to strengthen compliance and governance as we conduct our corporate activities. However, as a result of this matter, or if similar matters occur in the future, Honda’s brand image could be damaged, and Honda’s business and operating results could be adversely affected. See “Legal Risk” for a description of legal risks that could arise as a result of such matters.

Risks Relating to Honda’s ADSs

A holder of ADSs will have fewer rights than a shareholder has and such holder will have to act through the depositary to exercise those rights

The rights of shareholders under Japanese law to take various actions, including exercising voting rights inherent in their shares, receiving dividends and distributions, bringing derivative actions, examining a company’s accounting books and records, and exercising appraisal rights, are available only to holders of record. Because the depositary, through its custodian agents, is the record holder of the Shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited Shares. The depositary will make efforts to exercise votes regarding the Shares underlying the ADSs as instructed by the holders and will pay to the holders the dividends and distributions collected from the Company. However, in the capacity as an ADS holder, such holder will not be able to bring a derivative action, examine our accounting books or records or exercise appraisal rights through the depositary.

Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions

The Company’s Articles of Incorporation, Regulations of the Board of Directors, Regulations of the Nominating Committee, Regulations of the Audit Committee, Regulations of the Compensation Committee, and the Company Law of Japan (the “Company Law”) govern corporate affairs of the Company. Legal principles relating to such matters as the validity of corporate procedures, directors’ and officers’ fiduciary duties, and shareholders’ rights may be different from those that would apply if the Company were a U.S. company. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the laws of the United States. An ADS holder may have more difficulty in asserting his/her rights as a shareholder than such an ADS holder would as a shareholder of a U.S. corporation. In addition, Japanese courts may not be willing to enforce liabilities against the Company in actions brought in Japan that are based upon the securities laws of the United States or any U.S. state.

Because of daily price range limitations under Japanese stock exchange rules, a holder of ADSs may not be able to sell his/her shares of the Company’s Common Stock at a particular price on any particular trading day, or at all

Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price

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formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each stock, based on the previous day’s closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular trading day, or at all.

U.S. investors may have difficulty in serving process or enforcing a judgment against the Company, its directors or executive officers

The Company is a limited liability, joint stock corporation incorporated under the laws of Japan. Most of its directors and executive officers reside in Japan. All or substantially all of the Company’s assets and the assets of these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to effect service of process within the United States upon the Company or these persons or to enforce against the Company or these persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of judgment of U.S. courts, of liabilities predicated solely upon the federal securities laws of the United States.

The Company’s shareholders of record on a record date may not receive the dividend they anticipate

The customary dividend payout practice and relevant regulatory regime of publicly listed companies in Japan may differ from that followed in foreign markets. The Company’s dividend payout practice is no exception. While the Company may announce forecasts of year-end and interim dividends prior to the record date, these forecasts are not legally binding. The actual payment of year-end dividends requires a resolution of the Company’s Board of Directors. If the Board of Directors adopt such a resolution, the year-end dividend payment is made to shareholders as of the applicable record date, which is currently specified as March 31 by the Company’s Articles of Incorporation. However, such a resolution of the Board of Directors is usually made at a meeting of the Board of Directors held in April. The payment of interim dividends also requires a resolution of the Company’s Board of Directors. If the board adopts such a resolution, the dividend payment is made to shareholders as of the applicable record date, which is currently specified as September 30 by the Articles of Incorporation. However, the board usually does not adopt a resolution with respect to an interim dividend until after the record date.

Shareholders of record as of an applicable record date may sell shares after the record date in anticipation of receiving a certain dividend payment based on the previously announced forecasts. However, since these forecasts are not legally binding and resolutions to pay dividends are usually not adopted until after the record date, our shareholders of record on record dates for year-end and interim dividends may not receive the dividend they anticipate.

Cautionary Statement with Respect to Forward-Looking Statements in This Annual Report

This Annual Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements included in this Annual Report are based on the current assumptions and beliefs of Honda in light of the information currently available to it, and involve known and unknown risks, uncertainties, and other factors. Such risks, uncertainties and other factors may cause Honda’s actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors are generally set forth in Item 3.D “Risk Factors” and include, without limitation:

• the political, economic and social conditions in Japan and throughout the world including North America, Europe and Asia, including economic slowdowns, recessions, changes in consumer preferences, rising fuel prices, financial crises, exchange rates and other factors, as well as the relevant

7

governments’ specific policies with respect to economic growth, inflation, taxation, currency conversion, imports and sources of supplies and the availability of credit, particularly to the extent such current or future conditions and policies affect the automobile, motorcycle and power product industries and markets in Japan and other markets throughout the world in which Honda conducts its business, and the demand, sales volume and sales prices for Honda’s automobiles, motorcycles and power products;

• the effects of competition in the automobile, motorcycle and power product markets on the demand, sales volume and sales prices for Honda’s automobiles, motorcycles and power products;

• Honda’s ability to finance its working capital and capital expenditure requirements, including obtaining any required external debt or other financing upon favorable interest rates or other terms;

• the effects of environmental, personal information and other governmental regulations and legal proceedings; and

• the effects of events such as environmental or man-made disasters, pandemics, cyber-attacks or other events affecting Honda, its suppliers, customers or the economy as a whole.

Honda undertakes no obligation and has no intention to publicly update any forward-looking statement after the date of this Annual Report. Investors are advised to consult any further disclosures by Honda in its subsequent filings pursuant to the Securities Exchange Act of 1934.

Item 4. Information on the Company

A. History and Development of the Company

Honda Motor Co., Ltd. is a limited liability, joint stock corporation incorporated on September 24, 1948, under the Commercial Code of Japan as Honda Giken Kogyo Kabushiki Kaisha. It was formed as a successor to the unincorporated enterprise established in 1946 by the late Soichiro Honda to manufacture motors for motorized bicycles.

Since its establishment, Honda has remained on the leading edge by creating new value and providing products of the highest quality at a reasonable price for worldwide customer satisfaction. Honda develops, manufactures and markets motorcycles, automobiles and power products globally.

Honda’s principal executive office is located at 1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo, 107-8556, Japan. Its telephone number is +81-3-3423-1111. We maintain a website at https://global.honda/en/investors/ that contains information about our Company.

The United States Securities and Exchange Commission (the “SEC”) maintains a website at https://www.sec.gov/ which contains in electronic form each of the reports and other information that we have filed electronically with the SEC.

Principal Capital Investments

In the fiscal years ended March 31, 2022, 2023 and 2024, Honda’s capital expenditures were ¥2,503.8 billion, ¥2,233.5 billion and ¥3,141.1 billion, respectively, on an accrual basis. Also, capital expenditures excluding those with respect to equipment on operating leases were ¥477.7 billion, ¥690.0 billion and ¥692.7 billion, respectively, on an accrual basis. For further details of Honda’s capital expenditures during fiscal year 2024, see Item 4.D “Property, Plants and Equipment” of this Annual Report.

B. Business Overview

General

Honda’s business segments are the Motorcycle business operations, Automobile business operations, Financial services business operations, and Power products and other businesses operations.

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The following tables show the breakdown of Honda’s revenue from external customers by category of business and by geographical markets based on the location of the customer for the fiscal years ended March 31, 2022, 2023 and 2024:

	Fiscal years ended March 31,
	2022		2023		2024
	Yen (billions)
Motorcycle Business	¥	2,185.2	¥	2,908.9	¥	3,220.1
Automobile Business		9,147.4		10,593.5		13,567.5
Financial Services Business		2,820.6		2,954.0		3,248.8
Power Products and Other Businesses		399.2		451.1		392.2
Total	¥	14,552.6	¥	16,907.7	¥	20,428.8
	Fiscal years ended March 31,
	2022		2023		2024
	Yen (billions)
Japan	¥	1,943.6	¥	2,013.0	¥	2,242.2
North America		7,624.7		8,945.9		11,713.6
Europe		611.8		690.6		961.1
Asia		3,711.4		4,335.7		4,313.8
Other Regions		660.8		922.2		1,197.9
Total	¥	14,552.6	¥	16,907.7	¥	20,428.8

Motorcycle Business

In 1949, Honda began mass production of motorcycles with the Dream D-Type, followed by other models such as the Benly and the Cub F-Type. By 1957, Honda became the top Japanese manufacturer in terms of motorcycle production volume. Honda expanded its business overseas by establishing American Honda Motor Co., Inc. in the United States in 1959. Honda first started overseas production in Belgium in 1963.

Honda produces a wide range of motorcycles, with engine displacement ranging from the 50cc class to the 1800cc class. Honda’s motorcycle lineup uses internal combustion engine of air- or water-cooled, and in single, two, four or six-cylinder configurations. Honda also has electric vehicles in its lineup. Honda’s motorcycle lineup consists of sports, business and commuter models. Honda also produces a range of off-road vehicles, including all-terrain vehicles (ATVs) and side-by-sides (SxS).

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The following table sets out unit sales for Honda’s Motorcycle business, including motorcycles, all-terrain vehicles (ATVs) and side-by-sides (SxS) and revenue from Motorcycle business, and the breakdown by geographical markets based on the location of the customer for the fiscal years ended March 31, 2022, 2023 and 2024:

	Fiscal years ended March 31,
	2022							2023							2024
	Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue			Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue			Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue
	Units (thousands)		Units (thousands)		Yen (billions)			Units (thousands)		Units (thousands)		Yen (billions)			Units (thousands)		Units (thousands)		Yen (billions)
Japan		244		244	¥	105.0			246		246	¥	109.3			241		241	¥	113.7
North America		437		437		230.7			459		459		306.7			498		498		335.5
Europe		317		317		202.2			347		347		250.0			440		440		351.8
Asia		14,589		8,283		1,309.9			16,108		9,512		1,739.7			16,016		9,416		1,793.3
Other Regions		1,440		1,440		337.2			1,597		1,597		503.0			1,624		1,624		625.6
Total		17,027		10,721	¥	2,185.2			18,757		12,161	¥	2,908.9			18,819		12,219	¥	3,220.1
Motorcycle revenue as a percentage of total sales revenue						15	%						17	%						16	%

* Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.

See Item 4. D. “Property, Plants and Equipment” for information regarding principal manufacturing facilities.

For further information on recent operations and a financial review of the Motorcycle business, see “Operating Results” in “Item 5. Operating and Financial Review and Prospects”.

Automobile Business

Honda started Automobile business operations in 1963 with the T360 mini truck and the S500 small sports car models. Honda subsequently launched a series of mass-production models including the CIVIC in 1972 and the ACCORD in 1976, which established a base for its Automobile business. In 1969, production of the mini vehicles N600 and TN600 began in Taiwan using component parts sets. In 1982, Honda became the first Japanese automaker to begin local automobile production in the United States (with the ACCORD model) and later conducted local development and expanded production activities to include light truck models. In 1986, the Acura Brand was established and an exclusive sales network was launched in the United States.

Honda’s vehicles use gasoline engines of three, four or six-cylinder configurations, gasoline-electric hybrid systems and gasoline-electric plug-in hybrid systems. Honda also offers other alternative fuel-powered vehicles such as battery electric vehicles, fuel cell vehicles, and flexible fuel vehicles.

Honda’s principal automobile products include the following vehicle models: (in alphabetical order)

Passenger cars:

ACCORD, CITY, CIVIC, FIT, INTEGRA, JAZZ

Light trucks:

BREEZE, CR-V, FREED, HR-V, ODYSSEY, PILOT, VEZEL, ZR-V

Mini vehicles:

N-BOX

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The following table sets out Honda’s unit sales of automobiles and revenue from Automobile business and the breakdown by geographical markets based on the location of the customer for the fiscal years ended March 31, 2022, 2023 and 2024:

	Fiscal years ended March 31,
	2022							2023							2024
	Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue			Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue			Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue
	Units (thousands)		Units (thousands)		Yen (billions)			Units (thousands)		Units (thousands)		Yen (billions)			Units (thousands)		Units (thousands)		Yen (billions)
Japan		547		476	¥	1,340.7			550		484	¥	1,385.8			595		525	¥	1,600.6
North America		1,283		1,283		4,884.9			1,195		1,195		5,990.5			1,628		1,628		8,510.2
Europe		100		100		319.3			84		84		332.9			103		103		506.7
Asia		2,022		443		2,321.7			1,744		505		2,523.8			1,651		468		2,449.8
Other Regions		122		122		280.7			114		114		360.3			132		132		500.1
Total		4,074		2,424	¥	9,147.4			3,687		2,382	¥	10,593.5			4,109		2,856	¥	13,567.5
Automobile revenue as a percentage of total sales revenue						63	%						63	%						66	%

* Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans and others by our Japanese finance subsidiaries and provided through our consolidated subsidiaries are accounted for as operating leases in conformity with International Financial Reporting Standards (“IFRS”) and are not included in consolidated sales revenue to the external customers in our Automobile business. Accordingly, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our Automobile business.

See Item 4. D. “Property, Plants and Equipment” for information regarding principal manufacturing facilities.

For further information on recent operations and a financial review of the Automobile business, see “Operating Results” in “Item 5. Operating and Financial Review and Prospects”.

Financial Services Business

We offer a variety of financial services to our customers and dealers through finance subsidiaries in countries including Japan, the United States, Canada, the United Kingdom, Germany, Brazil and Thailand, with the aim of providing sales support for our products. The services of these subsidiaries include retail lending, leasing to customers and other financial services, such as wholesale financing to dealers.

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The following table sets out Honda’s revenue from Financial services business and the breakdown by geographical markets based on the location of the customer for the fiscal years ended March 31, 2022, 2023 and 2024:

	Fiscal years ended March 31,
	2022			2023			2024
	Yen (billions)
Japan	¥	418.3		¥	428.2		¥	440.7
North America		2,356.9			2,466.5			2,729.1
Europe		10.8			13.2			18.1
Asia		15.7			16.5			14.7
Other Regions		18.6			29.4			46.0
Total	¥	2,820.6		¥	2,954.0		¥	3,248.8
Financial Services revenue as a percentage of total sales revenue		19	%		17	%		16	%

For further information on recent operations and a financial review of the Financial services business, see “Operating Results” in “Item 5. Operating and Financial Review and Prospects”.

Power Products and Other Businesses

Honda’s Power products business began in 1953 with the introduction of the model H, its first general purpose engine. Since then, Honda has manufactured a variety of power products including general purpose engines, lawn mowers, generators, water pumps, brush cutters, tillers, outboard marine engines and snow throwers.

In Other businesses, Honda began deliveries of the HondaJet aircraft in December 2015.

The following table sets out Honda’s revenue from Power products and other businesses and the breakdown by geographical markets based on the location of the customer for the fiscal years ended March 31, 2022, 2023 and 2024:

	Fiscal years ended March 31,
	2022					2023					2024
	Honda Group Unit Sales / Consolidated Unit Sales*		Revenue			Honda Group Unit Sales / Consolidated Unit Sales*		Revenue			Honda Group Unit Sales / Consolidated Unit Sales*		Revenue
	Units (thousands)		Yen (billions)			Units (thousands)		Yen (billions)			Units (thousands)		Yen (billions)
Japan		353	¥	79.4			376	¥	89.6			302	¥	87.0
North America		2,738		152.1			2,274		182.1			1,083		138.7
Europe		1,189		79.3			1,168		94.3			794		84.4
Asia		1,487		64.0			1,408		55.5			1,294		55.9
Other Regions		433		24.3			419		29.4			339		26.0
Total		6,200	¥	399.2			5,645	¥	451.1			3,812	¥	392.2
Power Products and Other businesses revenue as a percentage of total sales revenue				3	%				3	%				2	%

* Honda Group Unit Sales is the total unit sales of completed power products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed power products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed power products of Honda and its consolidated subsidiaries. In Power products business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales since no affiliate and joint venture accounted for using the equity method was involved in the sale of Honda power products.

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For further information on recent operations and a financial review of the Power products and other businesses, see “Operating Results” in “Item 5. Operating and Financial Review and Prospects”.

Marketing and Distribution

Most of Honda’s products are distributed under the Honda trademarks in Japan and/or in overseas markets.

In fiscal year 2024, approximately 85% of Honda’s motorcycle units on a group basis were sold in Asia. Approximately 40% of Honda’s automobile units (including sales under the Acura Brand) on a group basis were sold in Asia followed by 40% in North America and 14% in Japan. Approximately 34% of Honda’s power products units on a group basis were sold in Asia followed by 28% in North America and 21% in Europe.

Sales and Service

In Japan, Honda produces and sells motorcycles, automobiles, and power products through its domestic sales subsidiaries and independent retail dealers. In overseas markets, Honda also provides motorcycles, automobiles, and power products through its principal foreign sales subsidiaries, which distribute Honda’s products to local wholesalers and retail dealers.

In fiscal year 2024, approximately 98% of Honda’s overseas sales were made through its principal foreign sales subsidiaries, which distribute Honda’s products to local wholesalers and retail dealers.

Honda sells spare parts and provides after-sales services through retail dealers directly or via its overseas operations, independent distributors and licensees.

Components and Parts, Raw Materials and Sources of Supply

Honda manufactures the major components and parts used in its products, including engines, frames and transmissions. Other components and parts, such as shock absorbers, electrical equipment and tires, are purchased from numerous suppliers. The principal raw materials used by Honda are steel plate, aluminum, special steels, steel tubes, paints, plastics and zinc, which are purchased from several suppliers. The most important raw material purchased is steel plate, accounting for approximately 46% of Honda’s total purchases of raw materials.

No single third-party supplier accounted for more than 5% of the Company’s purchases of major components and parts and principal raw materials during the fiscal year ended March 31, 2024.

Ordinarily, Honda does not have and does not anticipate having any difficulty in obtaining its required materials from suppliers and considers its contracts and business relations with the suppliers to be satisfactory. The Company does not believe any of its Japanese domestic suppliers are substantially more dependent on foreign suppliers than Japanese suppliers generally. However, it should be noted that Japanese industry in general is heavily dependent on foreign suppliers for substantially all of its raw materials.

Seasonality

Honda’s motorcycles and power products have historically experienced some seasonality. However, this seasonality has not generally been material to our financial results.

Environmental and Safety Regulation

Honda is subject to various government regulations, including environmental and safety regulations for automobiles, motorcycles and power products. Such regulations relate to items such as emissions, fuel economy,

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recycling and safety, and Honda has incurred and will in the future incur compliance and other costs in connection with such regulations. However, Honda’s efforts to meet the wide range of applicable regulatory requirements, both in its production activities and in its research and development activities, are an integral part of and inseparable from its normal operational activities as a manufacturer and its efforts to continuously develop competitive products meeting consumer preferences. Accordingly, Honda does not believe it is feasible to separately specify the above compliance costs with a reasonable amount of precision. Relevant environmental and safety regulations are described below.

Outline of Environmental and Safety Regulation for Automobiles

1. Emissions

Japan

In March 2018, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) introduced the Real Driving Emissions (RDE) examination for diesel vehicles. It became applicable to new models of vehicles beginning in October 2022 and will become applicable to current models of vehicles beginning in October 2024.

The Ministry of the Environment (MOE) issued a Ministerial Ordinance on the particle number (PN) regulation for diesel gasoline direct injection vehicles in August 2021.

In October 2022, MLIT decided to introduce PN regulation. Among diesel vehicles, it has been applicable to new models beginning in October 2023, and will be applicable to current models beginning in October 2025. Among gasoline direct injection vehicles, it will be applicable to the new models beginning in October 2024, and to the current models beginning in October 2026.

In December 2020, MOE announced the plan targeting the transition to the electrification of automobiles by around 2030, which covers hybrid vehicles, plug-in hybrid vehicles, electric vehicles and fuel cell vehicles.

The United States

Increasingly stringent emission regulations under the Clean Air Act have been enacted since the 1990s by the U.S. federal government.

Under the Clean Air Act, the State of California is permitted to establish its own emission control standards to the extent they are more stringent than federal standards. Pursuant to this authority, the California Air Resources Board (CARB) adopted the California Low Emission Vehicle Program in 1990, aiming to establish the strictest emission regulations in the world.

In August 2022, the Biden administration signed the Inflation Reduction Act of 2022. This act allows tax incentives to purchase clean vehicles which meet certain requirements. One of the requirements is that the final assembly of new motor vehicles is to be within North America. Most provisions of this act became effective in January 2023.

In November 2022, the CARB finalized Advanced Clean Car II (ACC II) regulations which will apply to 2026 and later model year vehicles. The ACC II regulations contain requirements for the new Low Emission Vehicle IV (LEV IV) regulation and new Zero-Emission Vehicle (ZEV) requirements. The new ZEV requirements will require all new light-duty vehicles sold in California to be zero-emission by 2035.

In April 2023, the U.S. Environmental Protection Agency (EPA) announced proposal of federal multi-pollutant regulation (Tier 4) together with more stringent greenhouse gas requirement which will apply from 2027 model year vehicles. The finalization of Tier 4 was announced on March 20, 2024. The finalized requirement requires a more stringent PM emission standard of 0.5mg/mile for light-duty and medium-duty

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vehicles compared to CARB LEV IV and fleet NMOG+NOx standard of 15 mg/mile for light-duty vehicles for 2032 model year.

Canada

On July 16, 2015, the Environment Canada (current Environment and Climate Change Canada) issued the final regulation of amendment to emission regulation whose requirements refer to Tier 3 regulations in the United States.

Europe

The Euro 6 regulation was implemented in September 2014. Emission limits for diesel vehicles were lowered even more than the Euro 5 levels for nitrogen oxides (NOx) and total hydrocarbon (THC) plus NOx. Additionally, Euro 6 requires limits on particle numbers from gasoline vehicles with direct injection engines.

The required ethanol density of test fuel was also increased, starting from September 2016.

The testing cycle to measure emissions has gradually been transitioning from New European Driving Cycle (NEDC) to Worldwide harmonized Light duty driving Test Cycle (WLTC) beginning from September 2017.

The European Commission implemented regulations regarding the Real Driving Emissions (RDE) using Portable Emissions Measurement System (PEMS). The monitoring phase started from April 2016 and RDE testing with emission limits started from September 2017 for NOx and PN.

The new Evaporative Emissions Test started from September 2019. The testing cycle was updated from NEDC to Worldwide harmonized Light vehicles Test Procedure (WLTP) in conformity with the United Nations Economic Commission for Europe (UNECE) Global Technical Regulation (GTR) No. 19.

On December 11, 2019, the European Commission released its communication on the “EU Green Deal,” which is intended to be the most ambitious package of measures that the European Commission has ever proposed, aiming for Europe to become the world’s first climate-neutral continent (economy) by 2050.

The Green Deal is designed as a set of 10 deeply transformative policies and more than 50 supporting legislative actions. One of the policies (Sustainable and smart mobility) includes “Euro 7 as more stringent pollutant emissions standards for combustion-engine vehicles.”

In November 2022, the European Commission proposed new emission standard “Euro 7” which, if finalized, will apply to all new vehicles sold after July 2025. “Euro 7” requires updated RDE test method, on-board monitoring (OBM) systems, on-board refueling vapor recovery systems and measurement of particulates from break wears and tire abrasions.

In March 2024, the European Parliament adopted a provisional agreement reached with the Council, regarding Euro 7. As a result, vehicles will need to comply with Euro 7 standards for longer, ensuring they remain cleaner throughout their lifetime. For the first time, EU standards included limits on brake particle emissions for cars and set minimum performance requirements for battery durability in electric and hybrid cars. However, the requirements for on-board refueling vapor recovery systems (ORVR) were not adopted in Euro 7 regulation.

China

China implemented Step 6b regulations in July 2023.

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The President of China, Xi Jinping, proclaimed at the 75th session of the United Nations General Assembly held between September 2020 and September 2021 that China would address “reduction of greenhouse gas emissions.” In response, the relevant regulatory authorities are proceeding with research and formulation of the new emission standards.

India

India implemented Bharat Stage VI (BS VI) regulations from April 2020, skipping the implementation of BS V regulations. The BS VI regulations feature two phases. The second phase has been applied from April 2023 with more stringent particle number and on-board diagnostic requirements and compliance for RDE.

Thailand

The Thai Cabinet has decided to introduce Euro 5 regulations from 2024. The timing of introduction of Euro 6 regulations is under discussion.

Brazil

Brazil implemented PROCONVE L7 in January 2022, and is scheduled to implement PROCONVE L8 from 2025. PROCONVE is a unique Brazilian regulation based on U.S. regulations.

2. Fuel Economy / CO2

Japan

In June 2010, MLIT and the Ministry of Economy, Trade and Industry (METI) jointly established a committee and commenced a study to formulate new fuel economy standards for passenger motor vehicles for 2020. The new standards were announced in March 2013. The next term fuel economy standards improve the 2015 standards by 19.6% and adopt the Corporate Average Fuel Economy (CAFE) calculation method.

In March 2018, MLIT and METI jointly established a committee and commenced a study to formulate new fuel economy standards for passenger motor vehicles for 2030. The new standards, announced in January 2020, require an improvement in fuel efficiency of 32.4% over the 2016 standards and adopted the CAFE calculation method.

In April 2020, it became mandatory to measure the fuel consumption of fuel cell vehicles in WLTP mode and electric mileage of electric vehicles in WLTC mode.

In June 2021, METI released “Green Growth Strategy Through Achieving Carbon Neutrality in 2050” and announced their target that 100% of new passenger vehicle sales would be made up of electric vehicles (including battery vehicles, fuel cell vehicles, plug-in hybrid electric vehicles and hybrid electric vehicles) by 2035.

In July 2021, MLIT revised its rules to establish new technical standard for in-vehicle measurement devices for fuel/energy consumption.

In March 2023, MLIT revised 2010 fuel efficiency standard. Standard levels have increased from 8 levels to 17 levels. At the same time, MLIT revised 2020 fuel economy standards by adding one higher level.

The United States

The National Highway Traffic Safety Administration (NHTSA) and EPA issued a regulation in August 2012 regarding GHG / CAFE regulations from the 2017 through 2025 model years. The standard for the 2025 model

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year is 163 g-CO2/mile or a 54.5 mpg industry average. The CARB also issued a regulation that was nearly equivalent to the EPA’s GHG regulations in August 2012. In December 2012, the CARB amended its GHG regulation so that a manufacturer is also deemed to comply with the CARB GHG regulations if it complies with EPA-GHG from the 2017 through 2025 model years.

When GHG / CAFE regulation was legislated in 2012, the EPA and the NHTSA announced that they, in coordination with the CARB, would perform a mid-term evaluation re-examining the appropriateness of limit values for 2022-2025 model years by April 2018. Accordingly, the EPA, the NHTSA and the CARB jointly issued a joint technical assessment report in July 2016 (a technical report, and not a decision document). In January 2017, the EPA solely issued the final determination that they would not change the 2022-2025 model years standards established in 2012.

In March 2017, former president Trump issued executive order “Promoting Energy Independence and Economic Growth” which includes rescinding the “Climate Action Plan” announced by former president Obama.

The CARB decided in March 2017 not to change the GHG regulations applicable for the 2022-2025 model years, and, on April 2, 2018, the EPA announced that the GHG requirement for 2022-2025 model years needs reconsideration.

On September 27, 2019, the EPA and the NHTSA jointly issued Part 1 of the “Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part 1: One National Program” replacing the current GHG / CAFE regulations.

The SAFE Vehicles Rule Part 1 clarified that federal law supersedes state law and withdrew a preemption waiver (Federal Priority) previously granted to allow the state of California to set its own GHG emission standards different from the federal standards set by EPA.

In March 2020, the EPA and the NHTSA jointly published the SAFE Vehicles Rule Part 2. Under the new SAFE rule, both GHG and CAFE requirements will increase in stringency by 1.5% per year during 2021-2026 model years. The CO2 standard for the 2026 model year is industry average of 199 g-CO2/mile.

In September 2020, the Governor of California signed an executive order stating that 100% of in-state sales of new cars and light trucks would be ZEV by 2035. Following the California Governor’s announcement, a number of states have followed suit.

In January 2021, President Biden issued an executive order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis which called for such as review of SAFE Vehicles Rule and other regulations.

In accordance with this executive order, in December 2021, the EPA issued the revised GHG emissions standards which are more stringent than the SAFE rule standards in each model year from 2023 through 2026.

Moreover, in December 2021, the NHTSA repealed “SAFE Vehicles Rule Part One: One National Program” and withdrew federal law’s preemption over state laws in CAFE regulation.

In May 2022, the NHTSA issued revised CAFE standards for model years from 2024 through 2026, which increase in stringency by 8% each year relative to the prior year for model years 2024, 2025 and 10% for 2026 model year. The CAFE standards will reach approximately 49 MPG in the 2026 model year (U.S. fleet average), up from 36 MPG in the 2021 model year.

In April 2023, EPA announced proposed GHG regulations together with multi-pollutant standards (Tier 4) to be effective from 2027 to 2032 model years. The finalization of GHG regulation was announced on March 20, 2024. The projected combined fleet target of CO2 is 85 g/mile for model year 2032.

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In August 2023, NHTSA proposed CAFE standards for model years from 2027 through 2032. The CAFE standards will reach approximately 57.8 MPG in the 2032 model year (U.S. fleet average).

Canada

The government of Quebec in Canada finalized the standard to mandate each automaker to sell a certain minimum number of ZEVs starting from the 2018 model year.

In May 2019, the government of British Columbia also adopted a bill to mandate ZEV sales from 2025.

In June 2019, the Environment and Climate Change Canada signed an agreement with the CARB in the United States to promote cooperation in reducing GHG emissions.

In September 2023, the government of Quebec adopted regulatory amendments to the Quebec’s ZEV regulations which increase the percentage of ZEV sales that a manufacturer must achieve each year from 2025 to 2035. The percentages in 2025 are 32.5%, in 2030 are 85%, and in 2035 are 100%.

In December 2023, the federal government adopted a national ZEV mandate from model year 2026 as a part of greenhouse gas regulation. The regulation mandates sales of new vehicles to be ZEVs at the rate of 20% in 2026, 60% in 2030, and 100% in 2035 model year.

Europe

In 2014, a new regulation was issued, requiring EU fleet-wide target of 95 g CO2/km for 2020 based on NEDC testing procedure.

The current European type-approval procedure for fuel consumption and CO2 emissions of cars based on NEDC has been gradually replaced with WLTP beginning from September 2017. During the transitional years, WLTP-measured CO2 values are calculated to NEDC CO2 values to check compliance to the NEDC based CO2 target.

On November 8, 2017, the European Commission proposed a new CO2 standard beyond 2025. The European Parliament and Council reached a provisional inter institutional agreement on the European Commission proposal during the fifth trilogue meeting on December 17, 2018.

The agreed target beyond 2025 is negative 15%. The agreed target beyond 2030 is negative 37.5% for new passenger cars and negative 31% for light commercial vehicles, respectively, compared to the 2021 average of all manufacturers’ EU fleet-wide target.

The agreement also provides that, for zero- and low-emission vehicles, a benchmark equal to 15% share of the respective fleets of newly registered passenger cars and light commercial vehicles shall apply from January 1, 2025, and a benchmark equal to 35% share of the fleet of newly registered passenger cars and a benchmark equal to 30% share of the fleet of newly registered light commercial vehicles shall apply from January 1, 2030.

On December 11, 2019, the European Commission released its communication on the EU Green Deal. See “—Outline of Environmental and Safety Regulation for Automobiles—1. Emissions—Europe.” One policy in the EU Green Deal (EU’s climate ambition for 2030 and 2050) includes “CO2 performance of cars.” On April 25, 2023, regulation (EU) 2023/851 was issued in the EU Official Journal, setting CO2 emission targets for newly registered passenger cars and light commercial vehicles, which contains a new provision establishing a 100% reduction of EU fleet-wide targets compared to 2021 from 2035 onwards. Furthermore, the European Commission will issue the methodology for the assessment and the consistent data reporting of the full life-cycle CO2 emissions of passenger cars and light commercial vehicles by 2025.

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China

China adopted a fuel consumption regulation for passenger vehicles in 2004. Step 5 of this regulation was implemented in 2021.

Newly published GB/T standards (Chinese national standards issued by the Standardization Administration of China) include an amendment to test methods for energy consumption of light-duty hybrid electric vehicles in November 2021.

The Standards Center of the China Automotive Technology and Research Center (CATARC), which is in charge of vehicle carbon emission management policies, is proceeding with research and formulation of a new carbon emission management system throughout the entire vehicle life cycle. The implementation is scheduled to begin in 2025.

India

India has promulgated rules to introduce fuel economy / CO2 regulations in 2017 and 2022 in a phased manner.

Brazil

Brazil implemented new fuel economy / CO2 regulations from 2022.

3. Recycling / End-of-Life Vehicles (ELV) / Chemicals and hazardous substances

Japan

Japan enacted the Automobile Recycling Law in July 2002, which required manufacturers to take back air bags, fluorocarbon and shredder residue derived from end-of-life vehicles (ELV), which became effective on January 1, 2005. ELV processing costs are collected from owners of cars currently in use and purchasers of new cars.

Europe

On December 30, 2006, the European Union adopted the Regulation concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), which became effective on June 1, 2007. From June 1, 2008, any manufacturer or importer of chemical substances is required to submit a registration to the European Chemicals Agency, based on annual production or import quantity levels. Submitting a pre-registration between June 1 and December 1, 2008, will allow the manufacturer or importer to extend the deadline for submitting the registration for existing chemical substances. The list of Substances of Very High Concern (SVHC) is amended periodically to include new substances. Upon a request by a consumer, a supplier of a product containing SVHC must provide the consumer with sufficient information, including at least the name of the substance, within 45 days.

On February 18, 2011, the first set of substances which require authorization for use after specified dates were announced. Manufacturers using these substances in Europe must either be authorized for use after submitting an application or use substitute substances. Substances which require authorization will be added periodically.

The European Union has issued a regulation amending the EU Battery Directive to the EU Battery Regulation in 2023. This regulation adds requirements related to carbon footprints and information disclosure of remaining life for recycling, among others. The EU Battery Regulation came into force in 2024.

The European Union has published a draft regulation amending the ELV Directive to the ELV Regulation. The proposed regulations would add requirements for recycled content and expanded producer responsibility.

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China

On June 23, 2017, China implemented automobile recycling laws partially following the regulations established by the European Union.

India

India has a plan to implement automobile recycling laws in the near future.

India has issued a final regulation called Battery Waste Management Rules on August 24, 2022. This final regulation requires the achievement of certain recovery targets for waste batteries and sets targets for minimum use of domestically recycled materials in new batteries.

4. Safety

Japan

Japan Automobile Standards Internationalization Center (JASIC), which is organized by the MLIT and Japan Automobile Manufacturers Association (JAMA), among others, has started to review a proposal for the unification of Safety/Environment Standards, vehicle categories and certification in order to promote further internationalization of standards and certifications. JASIC made the proposal to other contracting parties of the 58 / 98 Agreement in 2009 and reached an agreement among the contracting parties by 2017.

In January 2021, the MLIT adopted UN R153, which regulates fuel system integrity and electric power train safety in rear-end collisions.

In January 2021, the MLIT adopted UN R155, which regulates cyber security and cyber security management.

In January 2021, the MLIT adopted UN R156, which regulates software updates and software update management systems.

In January 2021, the MLIT adopted UN R157, which regulates automated lane keep systems (ALKS).

To achieve the highest level of traffic safety in Japan, MLIT developed a strategy to introduce fully automated driving in the latter half of the 2020s. To develop harmonized regulations for automated driving, MLIT is joining ITS / AD Informal Working Group under WP29 of the United Nations. MLIT is co-chairman of Informal Working Group together with the United Kingdom.

MLIT is considering introducing a regulation regarding “Accident Emergency Call Systems (AECS).”

Inspection of on-board diagnostics (OBD) will be required from October 2024 for inspections of vehicles with electronic control devices.

In 2021, the MLIT adopted UN R158, which regulates “rear view devices.”

In 2021, the MLIT adopted UN R160, which regulates “Event Data Recorders (EDRs).”

In 2022, the MLIT adopted UN R161, which regulates “Devices against Unauthorized Use.”

In 2022, the MLIT adopted UN R162, which regulates “Immobilizers.”

In 2022, the MLIT adopted UN R163, which regulates “Vehicles Alarm systems.”

In 2023, the MLIT adopted UN R165, which regulates “Reverse warning devices and signals.”

In 2023, the MLIT adopted UN R166, which regulates “Vulnerable Road Users in Front and Side Close Proximity.”

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The United States

In September 2016, the NHTSA issued the Federal Automated Vehicles Policy for safety testing and deployment of automated vehicles. This policy comprises four sections: vehicle performance guidance for automated vehicles, model state policy, current regulatory tools, and modern regulatory tools. The vehicle performance guidance section outlines a 15 point “safety assessment” for the safe design, development, testing and deployment of automated vehicles.

In December 2016, the NHTSA issued a final rule to newly establish Federal Motor Vehicle Safety Standard (FMVSS) 141, a standard for minimum sound requirements for hybrid and electric vehicles. The purpose of FMVSS141 is to reduce the number of injuries that result from electric and hybrid vehicle crashes with pedestrians by providing a sound level and sound characteristics necessary for these vehicles to be detected and recognized by pedestrians. Manufacturers must comply with the new requirements for 50% of all hybrid and electric vehicles produced from September 2018, and all hybrid and electric vehicles in or after September 2019. In February 2018, the NHTSA issued another final rule amending FMVSS141. The purpose of this amendment is to clarify the details of technical requirements and reschedule the phase-in schedule (1 year delay).

In September 2017, the NHTSA issued a voluntary guidance “A Vision for Safety” to update the Federal Automated Vehicle Policy issued in 2016. Manufacturers may demonstrate how they address the safety elements contained in this guidance by publishing a Voluntary Safety Assessment for automated driving system (SAE Level 3 through 5).

In April 2020, the NHTSA issued “FMVSS Considerations for Vehicles with Automated Driving Systems: Volume 1” to provide interpretation verifying the legality of ADS-DV (an SAE International level 4 or level 5) which are not equipped with manually operated driving controls against FMVSS regulations on the premise of existing manually operated driving controls.

In September 2020, the NHTSA amended FMVSS141 again to extend phase-in timing, responding to a petition from manufacturers citing the challenges in complying with FMVSS141 due to the supply chain disruptions caused by the COVID-19 pandemic. The application date of FMVSS141 was extended until March 1, 2021, a half year later than the previous phase-in schedule (September 1, 2020).

In October 2020, the NHTSA proposed to revise the child restraint system (CRS) concerning FMVSS208 “Occupant crash protection” to improve the CRS safety in crashes and proposed to revise the CRS lists in line with the currently in-production CRSs.

In January 2021, the NHTSA issued a draft of “Cybersecurity Best Practices for the Safety of Modern Vehicles (2020 update)” to update non-binding and voluntary guidance, which the NHTSA had issued its first edition in 2016, to the automotive industry for improving motor vehicle cybersecurity.

In January 2021, the NHTSA issued “FMVSS Considerations for Vehicles with Automated Driving Systems: Volume 2” to provide interpretation verifying the legality of ADS-DV (an SAE International level 4 or level 5) which are not equipped with manually operated driving controls against FMVSS regulations on the premise of existing manually operated driving controls. This Volume 2 mainly covered FMVSS that were not studied in Volume 1.

In June 2021, the NHTSA issued a general order that requires vehicle manufacturers to report accident information (General Order 2021-01). The NHTSA has mandated that if any vehicle (including prototype and modified vehicles as well as production vehicles) equipped with an automated driving system (ADS) and SAE Level 2 or higher Advanced Driving Assistant System (ADAS) causes an accident on publicly accessible roads in the United States while or immediately after the ADS and ADAS are activated, vehicle manufacturers must report such accident to the NHTSA within one day, update the report within 10 days, and report additional information once a month for three years from the accident. The reporting requirement is in effect from June 2021.

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In November 2021, President Biden signed Infrastructure Investment and Jobs Act (H.R.3684). The Act requires government agencies in the United States to enact various rules and regulations. In particular, the Act mandates agencies to implement rules regarding vehicle safety, mandatory installation of collision avoidance systems and drunk driving prevention technology, as well as surveys on connected vehicles. The content of each rule to be implemented is expected to be considered by the NHTSA and Department of Transportation (DOT) in the future.

In February 2022, the NHTSA issued a final rule to revise FMVSS108 “Lamps, Reflective Devices, and Associated Equipment.” This amendment enables the adoption of adaptive driving beam (ADB) systems, an advanced headlamp technology that optimizes the beam pattern without driver action, specifies track testing requirements for vehicles and lab testing requirements at the component level.

In March 2022, the NHTSA issued a final rule to revise FMVSS200 series (201/203/204/205/206/207/208/212/214/216a/219/225/226) for occupant protection in ADS-equipped vehicles. ADS-equipped vehicles without seats that are not intended to carry people are excluded from the application of the FMVSS200 series for occupant protection in the event of a collision. ADS-equipped vehicles without conventional steering control systems are partially excluded from the application of the FMVSS200 series (as it relates to protection from steering control systems), and new requirements for occupant protection in the event of a collision have been added.

In June 2022, the NHTSA issued a proposed rule that amends time series data requirements of 49 CFR Part 563 EDR (Event Data Recorders). The proposed regulation would change the recording time of EDR time-series measurement data from 5 seconds to 20 seconds for pre-collision data, and change the data sampling frequency from 2 Hz to 10 Hz. This revision proposes to increase the recording time and recording frequency of pre-collision data in order to analyze the behavior of the vehicle before a collision occurs. The application applies to the vehicles manufactured after the first September 1st of the year following the publication of the final rule.

In September 2022, the NHTSA issued a final version of “Cybersecurity Best Practices for the Safety of Modern Vehicles (2022 update)” to update non-binding and voluntary guidance. This 2022 revision reflects comments received on the 2020 version of the Guidance, and clarifies and adds terminology in the scope, updated reference ISO/SAE 21434, and general cybersecurity best practices.

In the United States, state laws stipulate privacy protection laws aimed at protecting the privacy of consumers within the state, and as of April 2023, California, Virginia, Colorado, Utah, and Connecticut have enacted such privacy protection laws.

In May 2023, the NHTSA proposed a new FMVSS that would require all new light vehicles to be equipped with automatic emergency braking systems. It proposed mandatory installation of forward collision alarms and automatic emergency braking for lead vehicles and pedestrians by newly establishing FMVSS 127 “Automatic emergency braking systems for light vehicles” and 49 CFR Part 596 “Automatic Emergency Braking Test Devices.” The application is planned in 2 phases for vehicles manufactured on or after September 1, three years and four years after the publication of the final rule.

In September 2023, the NHTSA proposed to revise FMVSS101 “Controls and displays” and FMVSS208 “Occupant crash protection.” In addition to driver’s seat, it proposed to install a seatbelt reminder system in the passenger and rear seats and a stringent audio-visual warning system for driver and front passenger seat which keeps the alert active until the seatbelts are fastened. The proposed application is scheduled as follows: the front seat requirement will apply for vehicles manufactured on or after the first September 1 of the year following the publication of the final rule and the rear seat requirement will apply for vehicles manufactured on or after the first September 1 of the second year following application of the final rule.

In September 2023, the Senate proposed a bill that requires the Secretary of Transportation to issue a rule requiring access to AM broadcast stations in motor vehicles. According to the bill, the Secretary of

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Transportation rule must be issued within one year after the enactment of this Act, and the requirement to install radios will take effect in two to three years after the rule is issued.

In December 2023, the NHTSA revised FMVSS213 “Child restraint systems; Applicable unless a vehicle or child restraint system is certified to § 571.213b” and issued FMVSS213b “Child restraint systems; Mandatory applicability beginning December 5, 2026.” FMVSS213 is applicable to products manufactured before December 5, 2024, and FMVSS213b applicable to products manufactured on or after December 5, 2026.

In January 2024, the NHTSA issued an initial rulemaking document providing for the gathering of information necessary to develop performance requirements and require that new passenger motor vehicles be equipped with advanced drunk and impairment driving prevention technology. The purpose of this information collection is to develop new FMVSS to reduce crashes and fatalities caused by alcohol-impairment driving.

In April 2024, the NHTSA proposed new FMVSS307 “Fuel system integrity of Hydrogen vehicle” and FMVSS308 “Compressed hydrogen storage system integrity.” This proposed safety standards are drafted in accordance with GTR No.13, but there are differences between some requirements and test procedures and GTR No.13. NHTSA proposed that the rule take effect the September 1st the year after the final rule is published.

In April 2024, the NHTSA proposed new FMVSS305a “Electric-powered vehicles: Electrolyte spillage and electrical shock protection” to replace FMVSS 305. NHTSA proposed compliance date would be two years after the publication of the final rule in the Federal Register.

Europe

In August 2018, the EU commission issued a regulation to significantly revise the legal framework for the EU type-approval. This regulation introduces a market surveillance system for managing the conformity of motor vehicles available on the market and adds a requirement of an expiration date for vehicle type approval. This EU type-approval came into effect on September 1, 2020.

In March 2019, the Committee of the Permanent Representatives of the Governments of the Member States to the European Union approved amendments to the “General Safety Regulation.” Road traffic safety in the EU has improved during the last decade, but recently the decrease in the number of road fatalities has stagnated.

To address this issue, the revised General Safety Regulation came into force in January 2020 and has been applied to vehicles from July 2022, which is 30 months after the enforcement. The revised General Safety Regulation includes mandatory equipment such as advanced driver assistance systems (ADAS).

In addition to making ADAS equipment mandatory, the revised General Safety Regulation will also enact legislation for self-driving cars in 2026. As a response, rules for cyber security management systems formulated by UNECE WP29 in June 2020 has been incorporated into the revised General Safety Regulation, and it will be mandatory from July 2022 as with other items of the revised General Safety Regulation. In addition, software updates will become more important with advanced electronic controls, so software update management systems will also be required from July 2022 to check whether appropriate updates have been made to the vehicle.

For the first time, process approval has been introduced into cyber security management systems and software update management systems for vehicle type approval. This is not only for vehicles, but for everything from development to production and sales. This is to ensure that manufacturers are taking protective measures against cyber-attacks in the scene.

As an important block of the European Data Strategy of February 2020, the Data Act was announced as the primary regulation governing the assurance of data value and management. On December 22, 2023, the EU Data Act (EU) 2023/2854 was finalized and published in the EU Official Journal.

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This Data Act applies to manufacturers and service co-owners, users and providers of products in the EU market with the aim of ensuring data management and accessibility of data between the private and public sectors. For vehicles, the European Commission has issued an impact assessment on access to vehicle data, features and resources. With regards to access to in-vehicle data for the purpose of providing vehicle related mobility services, the European Commission started public consultation for the revision of “Whole Vehicle Type Approval (WVTA) and market surveillance” (EU) 2018/858 in March 2022, a proposed regulation for which was issued in February 2022.

China

Vehicle safety regulations in China were drafted with reference to the UNECE standards and cover almost the same matters as the UNECE standards. However, these regulations also include unique provisions that take into account the distinctive characteristics of the Chinese market environment and the rules differ from the latest UNECE regulations. In addition, as rulemaking related to autonomous vehicles accelerates, in November 2023, “Notification of Intelligent and connected vehicle entry and road traffic pilot business activities” was published, making road tests and test operations of intelligent connected vehicles (ICV) possible.

In June 2022, the Shenzhen Special Economic Zone ICV Management Ordinance has been issued, in August 2023, local standards of Shenzhen were published specifying technical requirements for ICV products.

Future safety regulations are described as follows:

Newly published GB and GB/T standards (Chinese national standards issued by the Standardization Administration of China) include:

+ Amendment to electric vehicles safety requirements.

+ Motor vehicles – Devices for indirect vision – Requirements of performance and installation

+ Amendment to connection set for conductive charging of electric vehicles – Part 1: General requirements

+ Amendment to test methods for power performance of fuel cell electric vehicles

+ Amendment to fuel cell electric vehicles – Onboard hydrogen system specifications

+ Establishment of security requirements for automobile data collection and requirements for cross-border data transfers

Newly established GB and GB/T standards (not yet published) include:

+ Establishment of technical requirements related to cyber security, and

+ General technical requirements for software updates of vehicles

+ Amendment to battery electric passenger cars-specifications.

+ Amendment to measurement methods of net power for automotive engines and electric drive trains

+ Amendment to hybrid electric vehicles – Power performance – Test method

+ Amendment to battery electric vehicles – Power performance – Test method

+ Protective device against unauthorized use of motor vehicles

+ Intelligent and connected vehicle – Data storage system for automated driving

+ Technical requirements and testing methods for advanced emergency braking system (AEBS) of light-duty vehicles

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India

In December 2022, the Ministry of Road Transport and Highways (MoRTH) issued the 25th amendment of the Central Motor Vehicles Rules (CMVR), which requires traction battery for electric power train vehicles manufactured on and from April 1, 2023 to be approved by the Annex IX-K to Automotive Industry Standards (AIS)-038.

Brazil

In April and December 2020, The National Traffic Department (DENATRAN) issued an ordinance regarding the vehicle safety labelling program. The ordinance was implemented from July 1, 2021.

In October 2020, the National Institute of Metrology, Standardization and Industrial Quality (INMETRO) issued an ordinance amending quality technical regulations for new tires. The ordinance was implemented from April 21, 2022, for new tire type and is scheduled to be implemented from October 21, 2025, for existing tire type.

In November 2020, INMETRO issued an ordinance, which amended “Regulation for Technical Quality on Child Restraint Systems” and “Requirements for assessment of compliance for Child Restraint Systems.” The ordinance was implemented from May 23, 2021.

In January 2021, an Act of cyber security related to the products listed in the Reference List of Telecommunications Products published by the National Telecommunications Agency that have the function of terminal equipment with an Internet connection or telecommunications network infrastructure equipment was announced. The Act was implemented from July 4, 2021.

CONTRAN announced a second proposal regarding the obligation to install and technical requirements for the Automatic Emergency Braking System (AEBS) installed in vehicles in November 2022. For moving obstacles, it is scheduled to be implemented from January 1, 2026 (new models), and January 1, 2029 (all models). For fixed obstacles, it is scheduled to be implemented from January 1, 2029 (new models), and January 1, 2031 (all models).

CONTRAN announced a proposal regarding the obligation to install and technical requirements for the Lane Departure Warning System (LDWS) installed in vehicles in November 2022. It is scheduled to be implemented from January 1, 2026 (new models), and January 1, 2029 (all models).

CONTRAN issued a regulation that establishes requirements for occupant protection and fuel system integrity in vehicle collisions in December 2018. It is scheduled to be implemented from January 1, 2024 (new models), and January 1, 2026 (all models).

CONTRAN issued a regulation to establish pedestrian protection requirements in the event of a collision in December 2018. It is scheduled to be implemented from January 1, 2025 (new models), and January 1, 2030 (all models).

CONTRAN issued a regulation to establish requirements for rear warning and monitoring systems installed in vehicles in December 2018. It is scheduled to be implemented from January 1, 2025 (new models), and January 1, 2027 (all models).

CONTRAN issued a regulation to establish vehicle performance requirements in the event of pole side impact in December 2018. It is scheduled to be implemented from January 1, 2026 (new models), and January 1, 2030 (all models).

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Outline of Environmental and Safety Regulation for Motorcycles

1. Emissions

Europe

Euro 5 requirements other than catalyst monitoring of OBD (Onboard Diagnostics Regulation) started to apply to new vehicle models from January 2020 and started to apply to all vehicles registered from January 2021. Catalyst monitoring will apply to new vehicle models from January 2024 and will apply to all vehicles registered from January 2025.

On December 11, 2019, the European Commission released its communication on the EU Green Deal. See “—Outline of Environmental and Safety Regulation for Automobiles—1. Emissions—Europe.”

China

China is considering the introduction of Euro 5 level emission regulation.

India

India published BS VI regulation (Euro 5 level exhaust emission regulation), which became effective from April 2020. OBD II is introduced in two stages, Stage II-A and II-B. Stage II-A became effective from April 2023 and Stage II-B will become effective from April 2025.

Other Asian Countries

Thailand published the 7th phase (Euro 4) level emission regulation to be implemented from March 2020.

Indonesia, Vietnam and the Philippines are implementing emission regulations based on European regulations (Euro 3). In addition, consideration of the introduction of Euro 4 has started.

Brazil

Brazil published a new emission regulation called PROMOT 5 (Euro 5 level exhaust emission regulation), which has been applied to new motorcycles from January 2023 and will apply to all motorcycles registered from January 2025. The OBD stage 2 requirement will apply to new models of motorcycles from January 2025 and will apply to all motorcycles registered from January 2027.

2. Recycling / Chemicals and hazardous substances

Europe

The same REACH compliance required for motor vehicles is required for motorcycles.

The European Union has a plan to implement motorcycle recycling laws in near future.

The European Union has issued a regulation amending the EU Battery Directive to the EU Battery Regulation in 2023. This regulation adds requirements related to carbon footprints and information disclosure of remaining life for recycling, among others. The EU Battery Regulation came into force in 2024.

The European Union has published a draft regulation amending the ELV Directive to the ELV Regulation. The proposed regulations would add requirements for recycled content and expanded producer responsibility. Furthermore, the regulation is expected to apply not only to passenger cars but also to large vehicles and motorcycles, and discussions are continuing in Europe.

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China

China has a plan to implement motorcycle recycling laws in near future.

India

India has announced a plan to implement motorcycle recycling laws in near future.

India has issued a final regulation called Battery Waste Management Rules on August 22, 2022. This final regulation requires the achievement of certain recovery targets for waste batteries and sets targets for value of use of recycled materials in new batteries.

Vietnam

Vietnam implemented motorcycle recycling laws on January 1, 2018.

3. Safety

Europe

In January 2019, the EU Commission issued a regulation complementing Union type-approval legislation with regard to Brexit.

China

Electric motorcycle safety regulations were introduced in January 2021.

Newly established GB standards (mandatory national standards) and GB/T standards (voluntary national standards) include:

+ Technical requirements related to cyber security.

+ Security requirements for automotive data collection.

India

New vehicle models certified on and after April 1, 2018, all vehicles manufactured on and after April 1, 2019, shall be equipped with an advanced brake system. For advanced brake system, two-wheeled vehicles with engine capacity of not more than 125cc, continuous rated or net power not more than 11kW and power/weight ratio not more than 0.1 kW/kg shall be equipped with ABS or CBS. All other categories of two-wheeled vehicles shall be equipped with ABS. Furthermore, the Automotive Industry Standard Committee (AISC) published AIS 146, 147 and 148. These are the standards for stand, external projection and footrest strength. These standards became closer to those required by the European regulations.

The Ministry of Road Transport and Highways, Government of India, has promulgated technical requirements for batteries that include India’s own requirements called AIS-156 (Amd3). The standard was enforced in two phases, item by item, with Phase 1 coming into effect on December 1, 2022, and Phase 2 on March 31, 2023.

Other Asian Countries

In Thailand, regulations for brakes (UN R78) came effective in January 2022 and regulations for the safety of electric motorcycles (UN R136) became effective in January 2023, while regulations for lighting installation (UN R53) became effective in January 2024.

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Indonesia and Vietnam have been introducing various regulations regarding lighting and braking based on UN Regulations. Recently, Indonesia is considering the introduction of various regulations based on UN regulations, including horns (UN R28), speedometers (UN R39), lighting installation (UN R53), and brake systems (UN R78).

The Philippines has begun considering additional regulations to include an AHO function that automatically turns on the headlamps when the engine is running (From June 2023).

Brazil

The Brazil transport authority (CONTRAN) issued a standard concerning motorcycle braking based on the UNECE Brake regulation (R78.03) as well as a new regulation mandating ABS/CBS installation. The Brazilian standardization authority (INMETRO) currently mandates parts certification for tires and batteries, but added drive/driven sprocket, drive chain and muffler to the scope of application from March 24, 2019, at customs clearance. Brazilian government issued lighting regulation based on previous UNECE regulations; these regulations were implemented from January 1, 2019.

On January 31, 2020, CONTRAN implemented new requirements for license plates based on the Mercosur standards. In addition, the requirements for holes for sealing of license plates have been repealed, since QR codes are printed on the plates instead.

Outline of Environmental and Safety Regulation for Power Products

1. Emissions

The United States

In April 2016, CARB has published an evaporative emission regulation applicable to outboard engines implementing from the 2018 model year and later.

In September 2022, CARB published a final regulation to accelerate the transition of equipment using small off-road engines to zero-emission equipment, requiring most small off-road engines sold in California on or after January 1, 2024, to be zero emissions. In accordance with this, the evaporative (EVAP) emission standard value has also been changed.

In April 2023, the U.S. Consumer Product Safety Commission (CPSC) initiated a rule-making process to establish safety standards regulations, including CO emissions (g/h) limits for portable generators.

Europe

The European Commission has finalized strengthened exhaust emission regulation for non-road small spark-ignition engines (commonly known as Stage 5 regulation). Its limit values of exhaust emission follow the U.S. EPA phase 3 and the effective date is January 2018 for new certifications and January 1, 2019, for the engines newly placed in the market.

On December 11, 2019, the European Commission released its communication on the EU Green Deal. See “—Outline of Environmental and Safety Regulation for Automobiles—1. Emissions—Europe.”

In December 2022, the European Commission published an amendment to Delegated Reg. Monitoring Non-Road Mobile Machinery (NRMM) in service engines of less than 56kW or more than 560kW.

China

An exhaust emission standard was introduced in China on March 1, 2011. Its requirements are based on the European exhaust emission regulations and are applicable to small spark-ignition engines for non-road mobile

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machinery with 19 kW or less. The phase 2 regulation with durability requirement started from January 1, 2014. The phase 3 regulation is under development.

Thailand

In February 2022, the Ministry of Industry of Thailand issued standards for the environmental performance of small air-cooled gasoline engines as a general standard.

2. Recycling / Chemicals and hazardous substances

The United States

The Toxic Substances Control Act (TSCA) is the US hazardous substances legislation restricting Phenol, Isopropylated Phosphate (PIP) (3:1) for the first time in the world. PIP (3:1) is mainly used as a flame retardant. The first rule implementing this restriction was issued in January 2021, but relevant industrial associations objected that the transitional period, which was to last only 60 days, would make it impossible to comply in a timely manner. As a result, the compliance date has been extended to November 2024. Currently, “Motor vehicles” are exempted from this rule; however, PIP (3:1) can no longer be used for power products from 2024.

Europe

The same REACH compliance required for motor vehicles is required for power products. In June 2011, the European Union Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS) had been wholly revised and most power products were within its scope after 2019.

The European Union has issued a regulation amending the EU Battery Directive to the EU Battery Regulation in 2023. This regulation adds requirements related to carbon footprints and information disclosure of remaining life for recycling, among others. The EU Battery Regulation came into force in 2024.

China

On July 1, 2016, a regulation similar to European RoHS has entered into force. The first list of target products was published on March 12, 2018.

India

India has issued a final regulation called Battery Waste Management Rules on August 22, 2022. This final regulation requires the achievement of certain recovery targets for waste batteries and sets targets for value of use of recycled materials in new batteries.

3. Safety

Japan

The Agricultural Technology Innovation Engineering Research Center of National Agriculture and Food Research Organization has decided to conduct safety inspection of agricultural machinery that has replaced agricultural machinery safety appraisal from July 31, 2018.

In June 2021, the Snow Thrower Safety Council revised safety standards to add performance criteria allowing snow throwers to stop safely when moving backwards.

In April 2023, the MLIT expanded the certified output of shipbuilding businesses to 92 kW based on the provisions of the Ship Safety Act.

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The United States

In November 2016, the CPSC promulgated a notice of proposed rule-making in the Federal Register, which proposes to restrict the carbon monoxide emission from portable generator rated 19kW and below. This regulation was proposed to address the carbon monoxide poisoning injuries occurring from portable generators.

In April 2018, an American National Standard Institute (ANSI) Standard for portable generators were amended.

In December 2023, the Portable Generator Manufacturers’ Association (PGMA), a trade association that seeks to develop and influence safety and performance standards for the industry, revised ANSI/PGMA G300-2018 and approved a new standard by ANSI, G300-2023. It will become effective in January 2025.

Europe

The EU Commission plans to enhance existing noise regulation applicable to equipment intended to be used outdoors. This is a comprehensive rulemaking including expansion of the scope of regulation, enhanced noise limits, change to the conformity assessment system, among other things.

In 2019, the EU Commission began discussions for a revision of the Machinery Directive.

In 2020, discussions to revise the Low Voltage Directive, Battery Directive and Recreational Craft Directive have been initiated.

In January 2022, the European Commission issued a regulation on cybersecurity to supplement the Radio Equipment Directive.

In December 2023, the Council of Europe published a provisional agreement between the European Parliament and the Council on the proposed legislation regarding cybersecurity requirements for products with digital elements, which aims to ensure that products such as connected home cameras, fridges, TVs and toys are safe before they are placed on the market (Cyber Resilience Act).

China

The publication of a new “Safety technical specification for agricultural machinery,” which specifies safety requirements for agricultural machinery in general, is under consideration.

Preparing for the Future

Please note that the forward-looking statements contained herein are judgments made by Honda as of the filing date of this Annual Report and may differ materially from actual results because of uncertainties that may arise in the future, including those discussed under “Item 3. Key Information—D. Risk Factors.”

Management Policies and Strategies

Honda has two fundamental beliefs: “Respect for the Individual,” and “The Three Joys” (the Joy of Buying, the Joy of Selling, and the Joy of Creating). “Respect for the Individual” calls on Honda to nurture and promote these characteristics in our company by respecting individual differences and trusting each other as equal partners. “The Three Joys” is based on “Respect for the Individual,” and is the philosophy of creating joy for everyone involved in Honda’s activities, with the joy of our customers as the driving force.

Based on these fundamental beliefs, Honda strives to improve its corporate value by sharing joy with all people, and with our shareholders in particular, by practicing its mission statement: “Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction”.

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As a mobility company, we must sincerely address the difficult challenges of achieving “zero environmental impact” and “absolute safety.” By realizing the future mobility Honda dreams of and a mobility society people desire, while addressing societal values in the areas of the “environment and safety”, Honda aspires to chart a new trajectory of growth as a company.

Amidst this era of significant transformation in the business environment, we believe that we need to proactively change, and so we have made progress toward various initiatives. However, in order for all of us at Honda to work together cohesively toward a common purpose at an accelerated speed, we recognized the importance of re-clarifying “direction what we aim for” and “what value we offer.” Thus, we have redefined the Honda Global Brand Slogan—The Power of Dreams—.

“Redefinition of the Honda Global Brand Slogan”

Honda seeks to offer two value propositions Honda wants to continue offering—One is to enable people to “transcend the constraints of time and place,” and the other is to enable people to “augment of all human possibilities.” The future mobility we dream of and a mobility society people desire lie ahead of us as we continue to thoroughly pursue these value propositions. Therefore, we defined the two values we provide as “Transcend” and “Augment.”

Transcend: “Go beyond the limits”

Honda aims to create the significant value of “transcending the constraints of time” and “transcending the constraints of place” via mobility.

Augment: “Making something greater”

Honda aims to provide the value of “augmenting people’s possibilities” to enable people to become capable of doing something that they could not do before through the use of various mobility products and services.

Furthermore, it is the creativity of each and every one of us at Honda that becomes the key to creating the value proposition of Honda. With the key word of “Create,” all of us who work together at Honda will set high goals and take on challenges without being afraid of changes, to “create” something which will generate new value for our customers.

By “moving people physically” as a mobility company and “moving people’s hearts”—How we move you.—through the value we provide, Honda aims to become “the power that supports people around the world who are trying to do things based on their own initiative” in order to continue to be “a company society wants to exist.”

Management Challenges

The business environment surrounding Honda has come to a major turning point. Values are diversifying, the population is aging, urbanization is accelerating, climate change is worsening, and the industrial structure is changing due to progress in technologies such as the use of electric-powered motors, autonomous driving and IoT, all on a global basis. Additionally, geopolitical risks have emerged, where the outlook for the international situation remains uncertain, including the situations in Ukraine and the Middle East. Furthermore, Honda needs to build positive relationships with all stakeholders involved in our corporate activities to solve long-term social issues. Working to improve the quality of providing value is essential to achieve future growth.

In Automobile business, a wide variety of products have been introduced in the EV (electric vehicle) market. It is becoming increasingly challenging for Honda to differentiate its products based on traditional strengths such as performance of engines. With electrification on the rise, we anticipate increased demand for

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minerals essential to battery production such as nickel, lithium and cobalt. This has raised concerns about potential significant increases in battery prices due to possible shortages in these raw materials. Honda is taking proactive measures against such risks, especially in parts procurement, including for batteries. Our focus is on promoting recycling, reusing materials and incorporating sustainable materials, aligning with the vision of a resource circulation.

We believe that the motorcycle business will be able to sustain its market expansion, particularly in emerging countries characterized by burgeoning young populations. Additionally, environmental awareness is growing as governments not only in developed nations but also in emerging economies establish electrification targets. The electrification of mobility is expected to be a solution, while on the other hand, the demand for EVs in emerging countries is significantly influenced by government incentives. Moreover, challenges persist on the infrastructure side, including stable power supply and the development of charging networks. Amidst the uncertainties related to the shift to EVs, we plan to optimize resource allocation by identifying markets where demand for internal combustion engine (ICE) vehicles persists and where electrification is progressing. We will harness Honda’s strengths to distinguish ourselves from emerging EV manufacturers.

In Power Products and Other businesses, against the backdrop of increasing environmental regulations, there is a growing shift towards electrification in the domain of small-scale construction equipment and gardening, particularly in the realm of “small-scale” and “short-duration operation” products. Conversely, the demand for ICE products persists, fueled by their attributes such as “high power output and extended operation hours” and their “cost-effectiveness,” well-suited to specific applications. Thus, Honda comprehends the imperative to cater to the diversified market demands, adroitly steering its environmental endeavors in the ICE sphere even as it maintains an unwavering focus on electrification.

Challenges to be Addressed Preferentially

Considering the business environment, Honda has comprehensively identified social issues from sustainability point of view and selected challenges to be addressed preferentially aligning with the company’s strategic direction. Specifically, the Group has selected five non-financial areas as key themes: “environment” and “safety,” which are the key management themes the Group has long committed to; “human” and “technology,” which are our engines for growth; and “brand,” which could be regarded as the sum of all corporate activities. By linking these themes with our financial strategies, Honda will create social values and economic values.

“Five Key Themes”

1. Realization of a zero environmental impact of society

Honda seeks to eventually realize a zero environmental impact of society. Efforts will be centered around the Triple Action to ZERO program, which integrates three elements—carbon neutrality, clean energy and resource circulation—within a single initiative.

Carbon neutrality

In the Automobile business, as a medium- to long-term goal, we aim to increase the sales ratio of EVs and FCEVs (fuel cell vehicles) to 100% globally by 2040 by building a global EV production system that will target production of more than 2 million units per year by 2030.

To achieve this goal, Honda plans to expand its EV lineup, establish multiple battery procurement methods, expand recharging services, accelerate software development, and build a global EV production system at Honda.

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(EV lineup expansion)

Region	EV lineup: current and to be released
North America	• Launched the PROLOGUE by Honda and the ZDX by Acura in 2024, both of which are co-developed with General Motors Company (GM) • Plan to launch a mid- to large-size EV incorporating a new E&E architecture based on Honda’s proprietary EV platform in 2025 • Plan to launch the first model of the Honda 0 Series in each global region, starting with the North American market in 2026
China	• Launched the e:NS2 and e:NP2 in early 2024 • Plan to launch, at the end of 2024 or thereafter, the Ye P7 and the Ye S7 from the Ye series, the next-generation EV series for China, which were unveiled at the Auto China 2024 held in April 2024 In addition, plan to launch production models based on the Ye GT CONCEPT before the end of 2025 • Plan to introduce a total of 10 EV models, including the above 5 models by 2027
Japan	• Plan to launch N-VAN e:, an N-VAN-based light commercial EV in the fall of 2024 • Plan to launch an N-ONE-based EV in 2025 and two compact EVs, including an SUV model, in 2026
Europe	• Launched e:Ny1, a model from the e:N series for the European market in the fall of 2023 in all European countries

(Battery strategy)

For batteries, we plan to address the rapid pace of electrification by formulating a variety of battery procurement strategies to meet both current and anticipated needs. We plan to initiate mass production of batteries in North America by 2025 through a joint venture with LG Energy Solution Ltd., aiming to establish a new value chain. For the procurement of essential minerals, we have formed partnerships with HANWA Co., Ltd. and POSCO Holdings Inc. Additionally, we are collaborating with Ascend Elements, Inc. and Cirba Solutions, LLC in the recycling sector. From the late 2020s, we plan to not only advance our liquid lithium-ion batteries but also develop and introduce next-generation batteries, including semi-solid-state and all-solid-state varieties. To enhance the performance of our liquid lithium-ion batteries, we are collaborating with GS Yuasa International Ltd. to develop high-capacity and high-power versions specifically for EVs, supporting Japan’s rapid electrification. Furthermore, our investment in SES AI Corporation will bolster the joint development of semi-solid-state batteries. Our goal is to produce batteries that are safe, have high capacity and exhibit increased durability. Regarding all-solid-state batteries, we’re ramping up efforts to initiate a demonstration line in Sakura City, Tochigi Prefecture by 2024, targeting a market launch by the late 2020s.

(Charging and infrastructure strategy)

We are actively working on expanding charging services in line with our growth in the EV market. To promote the adoption of EVs in North America, seven companies, including Honda’s U.S. subsidiary, American Honda Motor Co., Inc., BMW Group, General Motors (GM), Hyundai, Kia, Mercedes-Benz Group and Stellantis N.V., have agreed to form a joint venture. The parties’ goal is to establish a high-capacity EV charging network across the U.S. and Canada. The first charging station is scheduled to open in the U.S. by the summer of 2024, with subsequent expansions focusing initially on metropolitan areas and major highways. For home charging, we will utilize Honda Smart Charge, an established EV charging service in North America, and plan to gradually introduce smart energy services that leverage the power supply capabilities of EVs.

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(Software strategy)

Under the “Software-Defined Mobility” concept, which delineates the value of both hardware and services, we are accelerating our software development. Specifically, Honda is advancing its E&E architecture and developing its unique vehicle OS, aiming for its adoption in the mid-size and large EVs that we intend to launch in North America in 2025. Using this vehicle OS as a foundation, Honda will continue to evolve its in-vehicle software, offering advanced functions and services even after the vehicle purchase. Furthermore, we will swiftly provide digital services highly compatible with EVs, centered on safety, comfort and reliability. These services, designed with a focus on UX, will be offered under a unified management, including user-friendly charging guidance and other appealing features.

(EV production system)

In response to the rapid electrification worldwide, we are advancing the establishment of an EV production system globally within Honda. In North America, Honda has identified its three existing plants in Ohio (Marysville and East Liberty, which produce automobiles, and the Anna Engine Plant, which manufactures automobile powertrains) as central locations for EV production. While utilizing these existing facilities, we are constructing efficient and highly flexible EV production lines.

To further accelerate efforts toward carbon neutrality, which is explained above, and “2. To realize a zero-traffic collision society”, mentioned below, it will be essential to strengthen environmental and electrification technologies as well as software development. Therefore, on March 15, 2024, we have signed a memorandum of understanding, with Nissan Motor Co., Ltd. (Nissan), under which we will begin a feasibility study of a strategic partnership in the fields of vehicle electrification and intelligence. Accordingly, we are considering a broad scope of partnership with Nissan, includes automotive software platforms, core components related to EVs, and complementary products.

Moreover, with regard to the battery strategy and EV production system, we announced in April 2024 that we will start a full-scale study to establish a comprehensive EV value chain in Canada in order to strengthen the EV supply system for the future increase in demand for EVs in North America. This value chain includes the establishment of a production system in Canada for key battery components, such as separators and cathode materials, through the formation of joint ventures with two partner companies, as well as the construction of a complete vehicle plant exclusively for EVs and an EV battery plant.

We will continue to pursue alliances in various fields using methods such as joint development and joint ventures to develop battery strategies, charging and infrastructure strategies, software strategies, and EV production systems.

In the Motorcycle business, Honda’s motorcycles meet the mobility needs of customers around the world and are used by a wide range of customers. We will continue to develop electric motorcycle platforms that meet the needs of customers in each country by leveraging our competitive manufacturing technology and know-how accumulated through the development of the ICE vehicle platform. We will lead the global electrification of motorcycles by delivering the same joy of mobility at a reasonable price for EVs as for ICE vehicles through highly efficient manufacturing. We aim to introduce, by 2026, a total of 10 models or more of electric motorcycles worldwide, with annual sales of 1 million units, and to expand, by 2030, our product lineup with sales of 4 million units.

To achieve this goal, we plan to leverage our strengths: a complete product lineup expansion; development, production, and procurement capabilities; advanced connectivity added to the basic performance of “accelerating/cruising, turning, and stopping;” and integrated online and offline customer touchpoints utilizing our sales network consisted of 30,000 dealership locations.

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(Complete product lineup expansion)

Honda seeks to accelerate its efforts to develop a full lineup of electric motorcycles by aggressively introducing a planned total of 30 models or more by 2030, including super sports, off-road, kids bikes and ATVs. We will also cater to a wide range of customer demands by offering two types of battery systems: a battery replacement system and a plug-in charging system with fixed batteries, from which customers can choose depending on their environment.

(Development, production and procurement strategies)

For the development of electric motorcycles, in the form of a modular platform, the battery, power unit and chassis of electric motorcycles are modularized respectively, and by combining such modules, a wide range of variations can be developed. We believe that this will enable Honda to quickly and efficiently introduce a number of models that accommodate the diverse needs of its customers around the world. For the production, Honda plans to initially utilize its existing infrastructure for ICE models. However, in order to build a solid production system and capability and further increase its competitiveness toward the achievement of the 2030 sales target of 4 million units, Honda plans to begin the operation of dedicated electric motorcycle production plants, globally, beginning around 2027. As for procurement, the current method of purchasing by functional components will be revised so that procurement can be done by component parts in the future. In addition, Honda will strive to reduce the cost of materials and logistics to increase the competitiveness of its procurement system and capability.

(Software strategy)

Connectivity is one of the features that we plan to significantly advance with electric motorcycles. Advanced connectivity will enable post-purchase software updates, including the addition of new functions, through OTA (over-the-air) or other formats. In the future, data obtained and accumulated from both ICE and electric models will be utilized to understand the needs of customers based on the data of how those motorcycle models are being used. We believe that this will enable Honda to offer customer experiences that only it can offer, including functions to enable the customer to make new discoveries and achieve enhanced safety.

(Integrated online and offline customer touchpoints)

In the electric motorcycle business, Honda will seek to improve customer convenience by offering online sales that allow customers to purchase motorcycles without going to a dealer in person, while also providing the peace of mind to customers through services provided by Honda’s existing global sales network of more than 30,000 dealership locations worldwide. By combining the strengths of existing dealerships and enhanced online services, we will offer more integrated online and offline customer touchpoints that provide customers with more convenience and peace of mind.

In addition, we will accelerate our endeavors to achieve carbon neutrality, transcending mere electrification. Our efforts will encompass enhancements in fuel efficiency within the ICE realm and technologies compatible with bioethanol fuel, all while adapting to the distinctive features of different regions.

Within the realm of electric product development in the Power Products business, our focal point resides in the electrification of small-scale construction equipment and gardening domain. Additionally, we are working to extend the reach of the “Honda Mobile Power Pack e:,” a portable and interchangeable battery introduced in the motorcycle business, to the sphere of power products. In the small-scale construction equipment domain, our strategy revolves around leveraging our established B2B customer base from the core business to promote electrification. We plan to support the electrification of finished equipment manufacturers through the sale and installation assistance of the electric power unit “eGX.” Beyond existing clientele, our efforts encompass the expansion of product integration to regions anticipated to adopt electrification in the future. Leveraging our

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strengths in the gardening domain, meticulously nurtured through attributes like the “precise cutting” ability and “endurance” of our walk-behind lawnmowers, we have solidified our presence. As we drive efficient development and production methodologies, we are poised to accelerate electrification, with external partnerships as a potential avenue. In the marine equipment domain, we are embarking on the initiation of demonstration trials for electric propulsion systems designed for small watercraft, anticipating future regulations pertaining to the utilization of ICE products in lakes.

While flexibly responding to the diversified needs of different countries and regions, we will assess the market entry for ICE products, leverage synergistic benefits with the motorcycle business and pursue efficient operations in the development and production areas such as component sharing, production optimization and procurement streamlining. Through these efforts, we aim to enhance product appeal in the production realm as well and strengthen the business foundation for electrification. At the same time, we aim to enhance environmental performance through improvements in fuel efficiency and technologies compatible with carbon-neutral fuels. This will enable us to offer even more competitive products and services.

For more details regarding “clean energy” and “resource circulation”, please see “Concepts and Approaches to Sustainability.”

2. To realize a zero traffic collision society

Honda aims to achieve zero traffic collision fatalities involving Honda motorcycles and automobiles worldwide by 2050. As a milestone, Honda aims to halve the number of global traffic collision fatalities involving Honda motorcycles and automobiles worldwide by 2030. These targets apply to new vehicles and motorcycles and those already available on the market.

For more details, please refer to “Concepts and Approaches to Sustainability.”

3. The evolution of human capital management

As a component of Honda’s human capital management initiatives, we have defined “HR Priority” as encompassing issues that warrant close attention through human capital strategies. This process involves intertwining these strategies with our business strategies. When delineating HR Priority, we engage in company-wide discussions about the trajectory in which we should channel our efforts. These discussions encompass both the medium- to long-term dimensions of the “evolution of human capital management,” a pivotal theme spanning the entire company, and the short- to medium-term aspects of fortifying our business strategy.

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We subsequently establish key goal indicators (KGIs) along with their target values as metrics for assessing the degree of accomplishment of HR Priority. Additionally, we formulate an array of human capital strategies, measures and key performance indicators (KPIs) to showcase the attainment of these target values as part of a coherent narrative. KGIs and their associated KPIs are subject to consistent monitoring as part of the business management framework. Furthermore, we employ the Plan-Do-Check-Act (PDCA) cycle, allowing for periodic adjustments of indicators and target values, as well as the adaptation or inclusion of measures as required.

For more details, please refer to “Concepts and Approaches to Sustainability—Strategy, Indicators and Targets of Human Capital.”

4. Creation of innovative technologies

We are committed to improving our innovation management, driven by our belief that the development of core technologies lays the groundwork for sustainable business and competitiveness. This commitment aligns with our values of “Transcend” and “Augment,” guiding us towards their realization. From 2019 to 2020, Honda’s research subsidiary, Honda R&D Co., Ltd., transferred its product development functions in the motorcycle, automobile and power products businesses to Honda Motor Co., Ltd. This strategic move allowed for a more focused approach to fundamental technology research, aimed at long-term value creation. To further enhance the realm of mobility, Honda R&D is allocating additional resources to areas such as advanced technology research, power unit exploration and materials investigation. The company has also identified several technology domains warranting deeper exploration, including new mobility, robotics, next-generation energy, including hydrogen utilization, batteries, intelligence technologies/AI and sustainable materials. Leading experts in these domains are spearheading Honda’s technological development, with the goal of creating innovative value. Furthermore, Honda collaborates in joint research initiatives with diverse institutions not only in Japan but also worldwide, aiming to synthesize and leverage knowledge on a global scale.

Within this framework, Honda is applying novel technologies developed in each technology domain to create captivating next-generation mobility solutions capable of delivering unprecedented value across various

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fields including sea, in the air and in space. Specifically, ongoing projects encompass the eVTOL, the Avatar Robot and ventures in space exploration. Drawing upon Honda’s core technologies—spanning combustion, electrification, control and robotics—we are poised to realize “the delight of expanding the horizons of human potential.”

5. Brand value enhancement

Honda brand has been shaped by the accumulation of every individual business activity, walking hand in hand with customers from its founding to the present. We recognize that enhancing Honda brand, which has been crafted over 75 years of history, and elevating its value for the future is a critically important objective for Honda.

In this period of significant transformation, we have redefined our global brand slogan, “The Power of Dreams,” with the aim of clearly demonstrating the value Honda creates for customers worldwide and uniting all associates to collectively work towards a common purpose. We believe that taking this beyond mere “words” and aligning it with all aspects of our corporate activities, including products and services, and connecting it to consistent implementation leads to the creation of an evolved Honda brand. Based on this mindset, we position the redefined global brand slogan as the cornerstone of Honda’s brand management, projecting the underlying beliefs onto various brand assets to establish a core of consistent branding. We aim to establish an appealing brand that resonates with stakeholders by developing branding based on a solid and unwavering common foundation, both within and outside the company. This will support and drive creativity powered by the “dreams” of all associates working at Honda.

“Financial Strategy”

6. Economic value enhancement

Given the significant changes in the business environment surrounding Honda as well as an increase in the types of risks, including geopolitical risks, it has become essential to leverage both financial and non-financial capital to attain sustainable growth of cash flows and enhance capital efficiency, thereby boosting corporate value. To realize it, we believe it is crucial to: “clearly define goals for each phase of business transformation and execute strategic resource allocation,” strengthen governance and conduct appropriate risk management, including “the strengthening of capital cost-conscious management” and “engage in active dialogue with stakeholders to enhance the quality and transparency of management.”

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a. Strategic resource allocation according to the business transformation phase

(Through 2025: “Strengthening Business Resilience of ICE Product Operations and Investment in EVs” Phase)

As we allocate resources to EVs in order to transform our business portfolio, we concurrently plan to concentrate on enhancing the business structure of ICE vehicles, with the objective of achieving a company-wide Return on Sales (ROS) of 7% or higher. Having built a robust financial foundation through enhancing our Automobile business structure which we have been working on, with these initiatives, we will steadily allocate resources to EVs.

(Through 2030: “Transition from ICE Vehicles to EVs” Phase)

Expediting strategic investments that foster the growth of EV business, we will broaden our range of EV offerings, primarily in both motorcycles and automobiles, while elevating market competitiveness. While there may be an shorter-term impact from upfront investments, our goal is to bolster the long-term cash generation capability of our ICE business, allocate resources to support transformation, sustain a return on invested capital (ROIC)*1 surpassing the cost of capital and aim for a company-wide ROIC surpassing 10% by FY2031.

*1  [Profit for the year attributable to owners of the parent + Interest expenses (excluding financial businesses)] /Deployed Capital*2

*2  Equity attributable to owners of the parent + Interest-bearing liabilities (excluding those from the financial business sector). Deployed capital is calculated using the average of the beginning and end of the period.

Furthermore, keeping an eye on market trends and flexibly changing the timing of investment, we plan to invest a total of ¥10 trillion in such as capital expenditures and research and development over the ten years from the fiscal year ended March 31, 2022 to establish a production system for 2 million EVs in 2030.

(2030s: “Growth of EV Business and Creation of New Value” Phase)

We strive to achieve a sales ratio of 100% for EV / FCEV by 2040, ensuring the sustainable growth of cash flow. To realize the creation of new value, we will stably allocate an annual research budget of around 100 billion yen to fundamental research areas, focusing on carbon-neutral technologies.

Concerning the distribution of our results, we regard returning profits to our shareholders as one of the foremost management priorities. This determination is made by factoring in internal reserves intended for future growth and the overall performance of the consolidated business, all of which are assessed from a long-term standpoint. Regarding dividends, using a consolidated payout ratio of 30% as a reference, we are committed to achieving steady and consistent dividend payments, capitalizing on Honda’s inherent strengths in generating cash while accelerating resource allocation for transformation. In line with our goal of enhancing capital efficiency and implementing flexible capital policy, we may also acquire our own shares at a timing that it deems appropriate.

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b. Strengthening governance and risk management

In an era of significant transformation, our objective is to enhance governance and infuse management practices with a heightened awareness of capital costs. This approach will empower us to respond flexibly and effectively to the evolving environmental dynamics, ultimately elevating our corporate value. We will employ the ROIC Tree to seamlessly connect on-ground initiatives with company-wide objectives. Our efforts will focus on optimizing profits, the numerator in ROIC, while enhancing the denominator—deployed capital—through prudent utilization of retained assets and strategic investment discernment, thus enhancing capital efficiency. Concerning our Financial Services business, where funding predominantly relies on liabilities, we will apply the return on equity (ROE) metric to strike a balance between profitability and stability. This balanced approach will maximize capital efficiency and lend support to our transformative endeavors.

c. Active dialogue with stakeholders

We firmly believe that increasing corporate value goes beyond merely outlining a roadmap for sustainable cash flow growth and improved capital efficiency. It also entails ensuring that Honda’s prospects are well comprehended in the capital markets. To achieve this, a fundamental requirement is that our stakeholders, including shareholders and investors, have an accurate understanding and a positive regard for our management direction. Taking proactive measures, our management team will seek to engage in an increased number of active dialogues with stakeholders, conducted through various events and individual meetings. Through these dialogues, our management team will seek to gain direct insights into the expectations and interests of the capital markets. We consider this feedback from stakeholders as highly valuable and will integrate it into our management approach, thus contributing to a further augmentation of corporate value.

Through these company-wide activities, Honda aims to be a company that society, which includes our shareholders, our investors and our customers, wants to exist.

Concepts and Approaches to Sustainability

Please note that the forward-looking statements contained herein are judgments made by Honda as of the filing date of this Annual Report and may differ materially from actual results because of uncertainties that may arise in the future, including those discussed under “Item 3. Key Information—D. Risk Factors.”

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Governance and Risk management

1. Governance

Honda is promoting corporate activities grounded in the Honda Philosophy. The Honda Philosophy consists of three components: the fundamental beliefs, the company principle, and the Management Policies.

Honda’s long-term management policies and medium-term management plan are approved and resolved by the Executive Council (chaired by the Director, President, and Representative Executive Officer, and Chief Executive Officer) and the Board of Directors. The Board of Directors is the final supervisory body, covering actions to address sustainability issues, including climate change issues. The Executive Council deliberates in advance on matters to be resolved by the Board of Directors and discusses important management matters within the scope of authority delegated to it by the Board of Directors.

In response to the need to address various risks associated with business activities and to oversee business operations for the sustainable development of society and Honda, Honda has designated knowledge in ESG and Sustainability, including ability in addressing climate change issues, as one of the necessary skills and appointed directors accordingly.

Each Operation and Supervisory Unit and subsidiary formulates and promotes action plans and measures based on the company-wide long-term management policies and medium-term management plan, and important matters are reported and approved at the Executive Council as appropriate. In each area of environment, safety, human resources, human rights, occupational safety and health, quality, and supply chain (purchasing and logistics), conference bodies have been established to promote global management through information sharing and discussions. For important cross-departmental issues such as addressing climate change issues, a cross-departmental task force is formed under the direct supervision of management members to consider and propose action plans and measures as appropriate, and important matters are reported and approved at the Executive Council. Compliance and risk management related to each area are operated by the Company’s basic policies for the development of internal control systems.

So far, policies and initiatives for sustainability issues have been discussed and examined at the Corporate Integration Strategy Meeting, which was set up for the purpose of building consensus on the company-wide direction based on internal and external environmental recognitions and material issues to be addressed as a corporate entity. In addition, the World Environment and Safety Strategy Committee was set up to promote and reinforce efforts in the environmental and safety-related areas.

In FY2024, Honda clarified KGIs (Key Goal Indicators overseen by the Board of Directors) and KPIs (Key Performance Indicators overseen by Executive Council), which are company-wide goals, and upgraded the management operation structure with the aim of achieving corporate operations that can be speedily linked to the value provided. Under the new structure, Operations and Supervisory Units and subsidiaries, as well as cross-departmental task force, consider and propose action plans and measures as appropriate, and important matters are reported and approved at the Executive Council. As a result of this upgrading, the Corporate Integration Strategy Meeting and the World Environment and Safety Strategy Committee, which had been held once a year, have been dissolved.

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The Board of Directors and the Executive Council regularly monitor the progress of KGIs for which the Board of Directors is responsible for supervision and KPIs for which the Executive Council is responsible for execution, thereby reinforcing management governance. Please refer to Item 6 B. “Compensation.” for details of the executive remuneration system linked to financial and non-financial indicators.

2. Risk management

Honda has established the Honda Global Risk Management Policy and has been conducting activities that will lead to sustainable growth and stable corporate management by actively controlling risks.

Under the supervision and monitoring of the Risk Management Officer elected by the Board of Directors, we categorize, manage and address risks defined as potentially inflicting significant damage or loss on Honda’s tangible and intangible assets, corporate activities and stakeholders of Honda and possibly affecting our corporate management. Each organization identifies and evaluates risks. Based on the results of its evaluation, the Operations Risk Management Officers identify priority risks for respective Operations.

Based on the recognition of risks within Honda and reflecting external risk trends, we also identify, check and discuss the response status to the company-wide priority risks deemed particularly important for the entire corporate entity. Important matters related to risk management are discussed by the Risk Management Committee established within Honda, and details of their activities are reported to the Executive Council as appropriate.

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Strategies, Indicators and Targets

1. Strategy

Honda aspires to chart a new trajectory of growth as a company, by realizing the future mobility that Honda dreams of and a mobility society people desire, while addressing societal values in the areas of the environment and safety.

(Environmental Strategy)

Honda seeks to realize a society with zero environmental impact. Efforts will be centered around the Triple Action to ZERO program, which integrates three elements—carbon neutrality, clean energy, and resource circulation—within a single initiative. The three elements are closely related. As such, rather than promoting them independently, we aim to maximize synergistic benefits by considering their linkages.

Carbon neutrality (Net zero CO2 emissions)

To address climate change issues, Honda will work toward a target of achieving net zero CO2 emissions from corporate activities and throughout the product lifecycle to limit the global average temperature rise to 1.5°C above pre-industrial levels.

We will promote the improvement of production efficiency, implementation of energy-saving measures, shifting to low-carbon energy and use of renewable energy in terms of reducing the total CO2 emissions of our corporate activities.

In the area of products, we will reduce CO2 emissions during product use by introducing innovative environmental technologies, such as electrification, to become carbon neutral, diversifying energy sources and implementing total energy management initiatives.

Clean energy (100% utilization of carbon-free energy)

To address energy issues, Honda aims to use only clean energy during product use and corporate activities.

Through the establishment of CO2 reduction technologies and the use of clean energy through the utilization of renewable and other energy sources, Honda will make its Automobile Plant of Saitama Factory in Japan Honda’s first carbon neutral plant in the year ending March 31, 2026. In developing these initiatives globally, we are also building a system to promote information sharing between business sites and regions.

Resource circulation (100% use of sustainable materials)

To address the effective utilization of resources, we will strive to develop products and establish systems that use sustainable materials with no environmental impact. In corporate activities, we aim to achieve zero industrial water intake and zero industrial waste at Honda plants by 2050.

Honda is actively utilizing recycled resources while working to stabilize the procurement of materials, including important minerals, while contributing to the reduction of CO2 emissions and energy consumption by researching advanced recycling technologies and promoting the establishment of a circular value chain, thereby contributing to a circular economy.

(Safety Strategy)

Toward zero traffic collision fatalities, Honda safeguards against accidents caused by various factors by evolving and combining three elements: Human Ability (awareness-building activities), Mobility Performance (technological development) and the Traffic Ecosystem (collaboration with others and system/service development).

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A major challenge as we move toward 2030 is fatal accidents involving motorcycles in emerging countries.

Honda is conducting awareness-building activities targeting a wide range of people and incorporating safety equipment into motorcycles, such as advanced brake systems of ABS*1 and CBS*2, and LED headlights that are highly visible and make riders more visible from other road users at the same time. For automobiles, we actively promote the functional evolution and dissemination of advanced driver assistance systems (ADAS), which we believe is effective in reducing accidents in emerging and developed countries.

Beyond that, a major challenge for the year 2050 will be fatal accidents worldwide involving at-risk road users such as pedestrians, cyclists and riders. To address this issue, we will promote R&D of “Safe and Sound Network Technology” that supports risk prediction and avoidance before an accident occurs by communicating with everyone sharing the road. Honda aims to achieve zero traffic collision fatalities involving Honda motorcycles and automobiles by 2050.

*1  ABS : Antilock Brake System

*2  CBS : Combined Brake System

2. Indicators and targets

(Environment)

To realize a society with zero environmental impact, Honda will execute Triple Action to ZERO. Please refer to the chart below.

	Target for 2030		Target for 2050
Reduction rate of total CO2 emissions from corporate activities (compared to FY2020)	46%		Net zero CO2 emissions
Sales ratio of electrified products	Motorcycles	15%
	Automobiles	30%
	Power products	36%
Reduction rate of CO2 emissions intensity of product use (compared to FY2020)	Motorcycles	34.0%
	Automobiles	27.2%
	Power products	28.2%
Reduction rate of total waste generation in corporate activities (compared to BAU*)	14.5%		Zero industrial waste
Reduction rate of total water intake in corporate activities (compared to BAU*)	14.5%		Zero industrial water intake

*  The estimated result for 2030 based on our production plans but without implementing our reduction strategies.

(Safety)

Honda aims to achieve zero traffic collision fatalities involving Honda motorcycles and automobiles worldwide by 2050. As a milestone, Honda aims to halve the number of global traffic collision fatalities involving Honda motorcycles and automobiles worldwide by 2030*1. These targets apply to new vehicles and motorcycles and those already available on the market.

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To realize the 2030 milestone, the functional evolution and implementation of advanced driver assistance systems (ADAS) will be important. Honda SENSING 360, the omnidirectional safety and driver-assistive system that further extends accident avoidance or damage mitigation, is targeted for deployment in all models in developed countries by 2030. To reduce the number of fatalities in motorcycle traffic accidents, Honda is gradually rolling out Honda SENSING with a motorcycle detection function. In addition, Honda aims to expand the application of advanced brakes such as ABS and CBS to more models of motorcycles.

	Target for 2030
Advanced Safety Equipment Application Rate	Automobiles in developed countries*2 Honda SENSING 360	100%
	Automobiles in emerging countries*3 Honda SENSING	100%
	Motorcycles in emerging countries*4 Advanced Braking (ABS/CBS)	100%

*1  Halve the number of traffic collision fatalities per 10,000 vehicles involving Honda motorcycles and automobiles worldwide in 2030 compared to 2020.

*2  Japan, USA, China, Europe

*3  Representative measurement countries India, Indonesia, Malaysia, Thailand and Brazil.

*4  Representative measurement countries India, Indonesia, Vietnam, Thailand and Brazil.

Strategy, Indicators and Targets of Human Capital

1. Strategy

(Honda’s Human Capital Management Linked to Business Strategy: A Defined Narrative)

As a component of Honda’s human capital management initiatives, we have defined “HR Priority” as encompassing issues that warrant close attention through human capital strategies. This process involves intertwining these strategies with our business strategies. When delineating HR Priority, we engage in company-wide discussions about the trajectory in which we should channel our efforts. These discussions encompass both the medium- to long-term dimensions of the “evolution of human capital management,” a pivotal theme spanning the entire company, and the short- to medium-term aspects of fortifying our business strategy.

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We subsequently establish KGIs along with their target values as metrics for assessing the degree of accomplishment of HR Priority. Additionally, we formulate an array of human capital strategies, measures and KPIs to showcase the attainment of these target values as part of a coherent narrative. KGIs and their associated KPIs are subject to consistent monitoring as part of the business management framework. Furthermore, we employ the Plan-Do-Check-Act (PDCA) cycle, allowing for periodic adjustments of indicators and target values, as well as the adaptation or inclusion of measures as required.

(Honda’s Human Capital Strategy)

This phase is centered on crafting human capital strategies aimed at “enhancing corporate competitiveness and restructuring the business framework through the optimal and efficient utilization of human capital.”

• (Medium- to Long-Term Perspective) Activating associates’ intrinsic motivations and fostering the integration of diverse individuals

While valuing Honda’s core values that underpin corporate competitiveness, we will implement professional talent development, creating environments that encourage practical application and establishing structure to accommodate diverse careers and work styles. Our commitment extends to bolstering individuals and organizations that embrace the challenge of realizing their “dreams.”

• (Short- to Medium-Term Perspective) Ensuring both quantitative and qualitative sufficiency of human resources in priority business areas

To foster structural business reform from a human resources standpoint, we will persist in our endeavors to acquiring and shifting human resources, particularly in priority areas. This forms a component of our vision to achieve both quantitative and qualitative sufficiency. To enable shifting of resources, we will actively invest in human resources to facilitate reskilling and implement measures to enhance proficiency in priority areas.

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2. Indicators and Targets

(Setting KGIs and Targets to Achieve Human Capital Strategy)

• (Medium- to Long-Term Perspective) Activating associates’ intrinsic motivations and fostering the integration of diverse individuals

- Challenging with High Motivation and Goal-Oriented Mindsets (Challenge to Dream), and backed by the Full Support of Supervisors

In order for Honda to deliver value to our customers, motivated by the dreams of each and every Honda associate, it is imperative that we fully acknowledge and comprehend the global brand slogan as a shared philosophy. This philosophy must then be reflected in our actions, central to our purpose and identity. We have formulated a new question for the engagement survey, aimed at gauging the extent to which associates exhibit strong motivation and drive to realize their aspirations. Furthermore, we have revised the engagement score calculation method to better articulate our intentions. We recognize that each associate’s aspirations of striving toward their dreams require support from supervisors within the organization. Consequently, we have infused this aspect into the engagement survey inquiries.

- Synergy is Maximized via the Integration of Diverse Knowledge

We believe that the fundamental objective of diversity initiatives is “to generate new businesses opportunities by leveraging diversity.” Especially, the enhancement of female participation stands as a pressing concern that will consistently command our endeavors. Without a doubt, we consider periods of business environment transformation as opportunities to broaden the active engagement of females. From a global perspective, we identify Japan as facing challenges in promoting opportunities for female participation. We gauge this by utilizing the proportion of females in managerial positions as an indicator of the issues at hand. Furthermore, we will also shape our global diversity, equity and inclusion initiatives in accordance with this recognition.

*  Scope: The Company and its subsidiaries in Japan subject to labor contracts with our union (see Item 6. D. “Employees”)

• (Short- to Medium-Term Perspective) Ensuring both quantitative and qualitative sufficiency of human resources in priority business areas

- Acquiring and Shifting of Human Resources to Fulfill Human Resource Needs in Priority Areas

For advancing our business success, we will also emphasize the quantitative and qualitative sufficiency of human resources aligned with our business portfolio. This encompasses presenting pivotal suggestions to bridge gaps, which will involve a comprehensive evaluation of our business plan.

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- Proactive Investment in Human Resources in Priority Areas

In our pursuit of acquiring skills within software as our priority area, we are set to undertake more human resource investment than ever before. Furthermore, alongside the company-wide reskill program, we are poised to substantially broaden specialized skills enhancement initiatives. This expansion aims to enable the creation of innovative value in this domain.

*  Scope: The Company and its subsidiaries in Japan subject to labor contracts with our union (see Item 6. D. “Employees”)

Climate Change-related Disclosures (Response to the TCFD Recommendations)

In treating responses to climate change and energy-related issues as crucial in the environmental field, in April 2021, Honda announced, its vision to “realize carbon neutrality for all products and corporate activities Honda is involved in by 2050.” Hence, Honda has declared our support to the Task Force on Climate related Financial Disclosures (TCFD), established by the Financial Stability Board (FSB), as well as disclosing information based on the information disclosure framework recommended by the TCFD.

1. Governance

Honda is promoting Group-wide efforts to realize a society with zero environmental impact throughout its life cycle.

Honda’s long-term management policies and medium-term management plan are approved and resolved by the Executive Council (chaired by the Director, President, and Representative Executive Officer, and Chief Executive Officer) and the Board of Directors. The Board of Directors is the final supervisory body, covering actions to address climate change issues. The Executive Council deliberates in advance on matters to be resolved by the Board of Directors and discusses important management matters within the scope of authority delegated to it by the Board of Directors.

In response to the need to address various risks associated with business activities and to oversee business operations for the sustainable development of society and Honda, Honda has designated knowledge in ESG and Sustainability, including ability in addressing climate change issues, as one of the necessary skills and appointed directors accordingly.

Each Operation and Supervisory Unit and subsidiary formulates and promotes action plans and measures based on the company-wide long-term management policies and medium-term management plan, and important matters are reported and approved at the Executive Council as appropriate. Respective Business Operations and Regional Operations formulate action plans and promote measures based on the global medium- to long-term environmental policies, based on information shared at the Global Environmental Secretariat Meeting (Secretariat: Corporate Strategy Operations). Each of Regional Operations holds a Regional Environmental Meeting to promote the PDCA cycle within Regional Operations. Each of Business Operations monitors regional progress and promotes the PDCA cycle within Business Operations. The Corporate Strategy Operations monitors the progress at Business Operations and Regional Operations and considers revisions to the medium- to long-term environmental policies and targets as necessary. Important matters are reported and approved at the Executive Council and reported and resolved at the Board of Directors. For important cross-departmental issues such as addressing climate change issues, a cross-departmental task force is formed to consider and propose action plans and measures as appropriate, and important matters are reported and approved at the Executive Council.

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Compliance and risk management related to the environment, including climate change, are operated by the Company’s basic policies for the development of internal control systems.

Toward the realization of a society with zero environmental impact, Honda’s Board of Directors and Executive Council regularly monitor the progress of KGIs for which the Board of Directors is responsible for supervision and KPIs for which the Executive Council is responsible for execution, thereby reinforcing management governance. Please refer to Item 6 B. “Compensation.” for details of the executive remuneration system linked to financial and non-financial indicators.

2. Risk management

Honda has established the Risk Management Committee to identify, check and discuss the status of company-wide priority risks which are deemed particularly important for the entire corporate entity.

“Climate change-related risks” such as risks related to environmental regulations and natural disasters caused by climate change are also managed and monitored by the Committee, which leads to promoting more effective risk management activities while considering the characteristics of respective Operations.

The Corporate Strategy Operations evaluates and identifies climate change-related risks by conducting scenario analysis in line with TCFD recommendations, reflecting external and internal risk information which includes company-wide priority risks. The results of the scenario analysis of climate change-related risks are shared with the Risk Management Committee.

Climate change-related risks are mainly addressed by the Corporate Strategy Operations, Business Operations and Regional Operations as well as by each respective Operation, Supervisory Unit, subsidiary and cross-departmental task force.

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Important matters related to risk management including the responses to the climate change-related risks are discussed by the Committee, and details of their activities are reported to the Executive Council as appropriate.

For more explanation of the risk assessment and management process, please refer to “Concepts and Approaches to Sustainability—Governance and Risk Management”.

3. Strategy

To achieve more sustainable corporate management, Honda identifies climate change-related risks and opportunities, reflects them in the corporate strategy, and promotes initiatives to generate new business opportunities through advancing Honda’s technologies, products and services. Honda will continue its efforts to enhance the corporate resilience.

(Scenario Analysis Overview)

To evaluate and examine the impacts of climate change on our business, Honda has defined multiple scenarios and conducted the scenario analysis noted in the TCFD recommendations. In the scenario analysis, Honda has set multiple scenarios including a scenario with significant policy transition which is based on the target laid out in the Paris Agreement “to limit the temperature increase to 1.5°C above pre-industrial levels” (1.5°C scenario) and a scenario where environmental regulations are not strengthened, leading to physical risks increase (4°C scenario).

In the scenario analysis, Honda has examined climate-related risks and opportunities for motorcycle, automobile, and power products businesses in accordance with the classification of the TCFD recommendations, and quantified the financial impact by the year 2030 under the scenario to the extent possible for evaluation and analysis.

For the scenario analysis based on the TCFD recommendations, we primarily used the following scenarios.

• 1.5°C scenario

Honda refers to the Net Zero Emissions Scenario (NZE) of the IEA (International Energy Agency) and the IPCC (Intergovernmental Panel on Climate Change) AR6 SSP1-1.9.

As part of the 1.5°C scenario, Honda assumes that measures to achieve carbon neutrality by 2050 will be promoted across the world, and that the development and use of new technologies will promote the widespread use of carbon-free products and renewable energy. Additionally, the transition to a circular economy is assumed to accelerate.

In the automobile industry, we assume even more stringent regulations on fuel efficiency and zero-emission vehicles (ZEVs), and, as a result, producing a rise in demand for electric vehicles (EVs) and fuel cell vehicles (FCEVs) — although mainly in developed countries.

Furthermore, in the motorcycle, automobile, and power products businesses, we assume that customers’ sense of value will shift, with an increasing number developing a preference for carbon-free products and services.

• 4°C Scenario

Honda has developed our 4°C scenario by using IPCC AR6 SSP3-7.0.

In the 4°C scenario, we assume that irreversible environmental changes will occur, leading to more frequent and more severe natural disasters.

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(Risks and Opportunities and Honda’s Responses*)

			Risk	Opportunity	Response
Transition Risk	1.5°C	Policy and Regulation	• Payment of fines for failure in complying with fuel efficiency regulations • Drop in unit sales of internal-combustion engine (ICE) vehicles due to more stringent fuel efficiency regulations • Increased costs due to carbon tax and Emissions Trading System (ETS), etc.	• Increase in sales due to a sales expansion of electrified products and services • Reduction of business operation costs through introducing the higher energy efficiency production facilities and utilization of renewable energy	• Introduce innovative environmental technologies, such as electrification, to become carbon neutral, diversifying energy sources and implementing total energy management initiatives • Promote the improvement of production efficiency, implementation of energy-saving measures, shifting to low-carbon energy and use of renewable energy
		Changes in Market	• Increase in energy purchase prices due to cleaner energy in the market
Physical Risk	4°C	Acute/Chronic	• Suspension of production resulting from natural disasters, which will damage Honda’s production bases and disrupt its supply chain	• Increase in sales of electrified products that can be used as an emergency power source when the need for power supply increases during a disaster	• Formulation and revise of business continuity planning (BCP) , Implementation of countermeasures by conducting trainings • Promote the establishment of a stable production structure via a robust supply chain

*  This list is not intended to be exhaustive and does not cover all risks and opportunities or Honda’s measures with respect thereto.

4. Metrics and Targets

By 2050, Honda is seeking to realize carbon neutrality for all products and corporate activities the Company is involved with.

For our target of net zero CO2 emissions for 2050, please see “Concepts and Approaches to Sustainability—Strategies, Indicators and Targets—2. Indicators and targets.”

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C. Organizational Structure

As of March 31, 2024, the Company had 61 Japanese subsidiaries and 228 overseas subsidiaries. The following table sets out for each of the Company’s principal subsidiaries, the country of incorporation, function and percentage ownership and voting interest held by Honda.

Company	Country of Incorporation	Function	Percentage Ownership and Voting Interest
Honda R&D Co., Ltd.	Japan	Research & Development		100.0
Honda Finance Co., Ltd.	Japan	Finance		100.0
American Honda Motor Co., Inc.	U.S.A.	Coordination of Subsidiaries Operation, Research & Development, Manufacturing and Sales		100.0
American Honda Finance Corporation	U.S.A.	Finance		100.0
Honda Development and Manufacturing of America, LLC	U.S.A.	Research & Development and Manufacturing		100.0
Honda Canada Inc.	Canada	Manufacturing and Sales		100.0
Honda Canada Finance Inc.	Canada	Finance		100.0
Honda de Mexico, S.A. de C.V.	Mexico	Manufacturing and Sales		100.0
Honda Motor Europe Limited	U.K.	Coordination of Subsidiaries Operation and Sales		100.0
Honda Finance Europe plc	U.K.	Finance		100.0
Honda Motor (China) Investment Co., Ltd.	China	Coordination of Subsidiaries Operation and Sales		100.0
Honda Auto Parts Manufacturing Co., Ltd.	China	Manufacturing		100.0
Honda Motorcycle & Scooter India (Private) Ltd.	India	Manufacturing and Sales		100.0
Honda Cars India Limited	India	Manufacturing and Sales		100.0
P.T. Honda Prospect Motor	Indonesia	Manufacturing and Sales		51.0
Honda Malaysia Sdn Bhd	Malaysia	Manufacturing and Sales		51.0
Asian Honda Motor Co., Ltd.	Thailand	Coordination of Subsidiaries Operation and Sales		100.0
Honda Automobile (Thailand) Co., Ltd.	Thailand	Manufacturing and Sales		89.0
Thai Honda Co., Ltd.	Thailand	Manufacturing and Sales		72.5
Honda Vietnam Co., Ltd.	Vietnam	Manufacturing and Sales		70.0
Honda South America Ltda.	Brazil	Coordination of Subsidiaries Operation		100.0
Moto Honda da Amazonia Ltda.	Brazil	Manufacturing and Sales		100.0

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D. Property, Plants and Equipment

The following table sets out information, as of March 31, 2024, with respect to Honda’s principal manufacturing facilities, all of which are owned by Honda:

Location	Number of Employees		Principal Products Manufactured
Yorii-machi, Osato-gun, Saitama, Japan		4,075	Automobiles
Hamamatsu, Shizuoka, Japan		1,925	Power products and transmissions
Suzuka, Mie, Japan		5,516	Automobiles
Ozu-machi, Kikuchi-gun, Kumamoto, Japan		2,460	Motorcycles, all-terrain vehicles, power products and engines
Greensboro, North Carolina, U.S.A.		795	Aircraft
Burlington, North Carolina, U.S.A.		96	Aircraft engines
Marysville, Ohio, U.S.A.		5,912	Automobiles
Anna, Ohio, U.S.A.		2,469	Engines
East Liberty, Ohio, U.S.A.		2,556	Automobiles
Lincoln, Alabama, U.S.A.		4,544	Automobiles and engines
Greensburg, Indiana, U.S.A.		2,380	Automobiles
Alliston, Canada		5,049	Automobiles and engines
El Salto, Mexico		491	Motorcycles
Celaya, Mexico		4,853	Automobiles
Gurugram, India		1,936	Motorcycles
Alwar, India		2,765	Motorcycles and automobiles
Narasapura, India		2,054	Motorcycles
Ahemdabad, India		1,020	Motorcycles
Karawang, Indonesia		2,643	Automobiles and engines
Melaka, Malaysia		2,172	Automobiles
Batangas, Philippines		1,390	Motorcycles
Ayutthaya, Thailand		2,306	Automobiles
Prachinburi, Thailand		1,168	Automobiles
Bangkok, Thailand		3,824	Motorcycles and power products
Phuc Yen, Vietnam		4,752	Motorcycles and automobiles
Duy Tien, Vietnam		761	Motorcycles
Buenos Aires, Argentina		681	Motorcycles
Itirapina, Brazil		1,370	Automobiles
Manaus, Brazil		7,797	Motorcycles and power products

In addition to its manufacturing facilities, the Company’s properties in Japan include sales offices and other sales facilities in major cities, repair service facilities, and R&D facilities.

As of March 31, 2024, the Company’s property, with a net book value of approximately ¥2.4 billion, was subject to specific mortgages securing indebtedness.

Capital Expenditures

Capital expenditures in the fiscal year ended March 31, 2024 were applied to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities.

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Total capital expenditures for the year amounted to ¥2,836.4 billion, increased by ¥799.0 billion from the previous year. Also, total capital expenditures, excluding equipment on operating leases, for the year amounted to ¥387.9 billion, decreased by ¥105.9 billion from the previous year. Spending by business segment is shown below.

	Fiscal years ended March 31,
	2023		2024		Increase (Decrease)
	Yen (millions)
Motorcycle Business	¥	44,818	¥	57,244	¥	12,426
Automobile Business		438,469		315,524		(122,945	)
Financial Services Business		1,543,664		2,449,030		905,366
Financial Services Business (Excluding Equipment on Operating Leases)		216		561		345
Power Products and Other Businesses		10,405		14,657		4,252
Total	¥	2,037,356	¥	2,836,455	¥	799,099
Total (Excluding Equipment on Operating Leases)	¥	493,908	¥	387,986	¥	(105,922)

Intangible assets are not included in the table above.

In Motorcycle business, we made capital expenditures of ¥57,244 million in the fiscal year ended March 31, 2024. Funds were allocated to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities.

In Automobile business, we made capital expenditures of ¥315,524 million in the fiscal year ended March 31, 2024. Funds were allocated to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities.

In Financial services business, capital expenditures excluding equipment on operating leases amounted to ¥561 million in the fiscal year ended March 31, 2024, while capital expenditures for equipment on operating leases were ¥ 2,448,469 million.

In Power products business, capital expenditures of ¥14,657 million in the fiscal year ended March 31, 2024, were deployed to upgrade, streamline, and modernize manufacturing facilities, and to improve R&D facilities.

Plans after fiscal year 2024

Our management mainly considers economic trends of each region, demand trends, situation of competitors and our business strategy such as introduction plans of new models in determining the future of projects.

The estimated amounts of capital expenditures for the fiscal year ending March 31, 2025 are shown below.

	Fiscal year ending March 31, 2025
	Yen (millions)
Motorcycle Business	¥	68,000
Automobile Business		593,200
Financial Services Business		1,500
Power Products and Other Businesses		7,300
Total	¥	670,000

The estimated amount of capital expenditures for Financial services business in the above table does not include equipment on operating leases.

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Intangible assets are not included in the table above.

Honda announced in April 2024 that we will start a full-scale study to establish a comprehensive EV value chain in Canada in order to strengthen the EV supply system for the future increase in demand for EVs in North America. This value chain includes the establishment of a production system in Canada for key battery components, such as separators and cathode materials, through the formation of joint ventures with two partner companies, as well as the construction of a complete vehicle plant exclusively for EVs and an EV battery plant. The EV battery plant to be constructed in Canada is expected to have a production capacity of 240,000 EVs per year and is planned to start operation in 2028. The EV battery plant will have a capacity of 36GWh per year. Total investment amount for establishing a comprehensive EV value chain in Canada is expected to be approximately CAD$15 billion, including investment by joint venture partners, as of the filing date of this Annual Report. To support this project, Honda is collaborating with the governments of Canada and Ontario to drive innovation in low-emissions manufacturing by assessing performance-based initiatives available through the federal government’s new Investment Tax Credits and provincial direct and indirect incentives. Honda has begun the process of evaluating the scope of its investment and completing negotiations with joint venture partners.

In the fiscal year ended March 31, 2023, Honda Development and Manufacturing of America LLC, which is one of the Company’s consolidated subsidiaries, announced its plan to re-tool three existing plants in Ohio, the United States, which are the Marysville Auto Plant and East Liberty Auto Plant for automobile production, and Anna Engine Plant for automobile powertrain production, to prepare for full-scaled production of EVs in the future. The production equipment in these plants is planned to start operation in 2026. Honda will evolve these plants as its EV Hub in the coming years.

Furthermore, in order to secure stable battery procurement in North America, the Company established an unconsolidated joint venture to manufacture lithium-ion batteries for electric vehicles in the United States during the fiscal year ended March 31, 2023. The joint venture began construction of a new battery plant early in 2023 with the goal of completion by the end of 2024 and starting mass production by the end of 2025. The plant aims to have an annual production capacity of approximately 40GWh. All batteries produced by the new joint venture will be supplied exclusively to Honda plants in North America for battery electric vehicles sold in North America. For details, see “Unrecognized commitment” of note “(30) Related Parties” to the accompanying consolidated financial statements.

For information on Honda’s funding policies, see Item 5.B “Liquidity and Capital Resources—Overview of Capital Requirements, Sources and Uses”.

Item 4A. Unresolved Staff Comments

We do not have any unresolved written comments provided by the staff of the SEC regarding our periodic reports under the Securities Exchange Act of 1934.

Item 5. Operating and Financial Review and Prospects

You should read the following discussion of our financial positions and operating results together with our consolidated financial statements included in this Annual Report.

A. Operating Results

Overview

Honda aims to achieve zero environmental impact of not only its products but also the entire product life cycle, including its corporate activities, and zero traffic collision fatalities involving our motorcycles and automobiles globally by 2050. For more details, please see Item 4. “Information on the Company—B. Business

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Overview—Preparing for the Future—Management Policies and Strategies.” To achieve these goals, it will be essential to make investments strategically at the appropriate timing. We will leverage the stable earnings base of Motorcycle business and ICE/hybrid products in Automobile business. With a view to achieving our target of producing 2 million EVs in 2030, we will further shift resources to electrification and software initiatives as we seek to introduce attractive EVs only Honda can offer, establish a comprehensive EV value chain with a central focus on batteries and advance our EV production technologies and facilities, while carefully assessing the level of EV adoption in the market.

Our business is subject to a severe economic and social environment, and our profitability depends on various factors. In such an environment, we are proactively working to resolve various social issues and to address risks such as climate change. For details of these social issues and the risks we are subject to, please see Item 4. “Information on the Company—B. Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially” and Item 3.D “Risk Factors.” In the process of, or as a result of, dealing with such social issues and risks, our sales volumes may be affected and additional costs may be incurred, which may have a significant effect on our future profitability.

Business Environment

The economic environment surrounding Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method in the fiscal year ended March 31, 2024, showed signs of pick up due to the end of COVID-19 and the resolution of semiconductor supply shortages among other factors, although the future outlook remained uncertain due to the international situation, including in Ukraine and the Middle East and the impact of inflation. In the United States, the economy expanded due to factors such as increased consumer spending despite monetary tightening. In Europe, the economy was in a weak tone due to sluggish consumer spending and production. In Asia, the economy recovered in India, moderately recovered in Indonesia, and picked up in Thailand, while the pick-up was at a standstill in China. In Japan, the economy gradually recovered, although there were signs of a standstill.

The trends, uncertainties, demands, commitments and events identified below may continue or recur, impacting the Company’s future financial results.

Overview of Fiscal Year 2024 Operating Performance

Honda’s consolidated sales revenue for the fiscal year ended March 31, 2024, increased from the fiscal year ended March 31, 2023, due mainly to increased sales revenue in Automobile business as well as positive foreign currency translation effects. Operating profit increased from the previous fiscal year, due mainly to an increase in profit attributable to price and cost impacts as well as sales impacts, which was partially offset by increased expenses.

Motorcycle Business

Honda’s consolidated unit sales of motorcycles, all-terrain vehicles (ATVs), and side-by-sides (SxS) in fiscal year 2024 totaled 12,219 thousand units, increased by 0.5% from the previous fiscal year, mainly due to the increases in consolidated unit sales primarily in India, Brazil and Turkey, which were offset by a decrease in consolidated unit sales in Vietnam and Thailand.

Automobile Business

Honda’s consolidated unit sales of automobiles in fiscal year 2024 totaled 2,856 thousand units, increased by 19.9% from the previous fiscal year, mainly due to an increase in consolidated unit sales primarily in the United States.

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Power Products and Other Businesses

Honda’s consolidated unit sales of power products in fiscal year 2024 totaled 3,812 thousand units, substantially decreased by 32.5% from the previous fiscal year, mainly due to a decrease in consolidated unit sales primarily in the United States.

Fiscal Year 2024 Compared with Fiscal Year 2023

Sales Revenue

Honda’s consolidated sales revenue for the fiscal year ended March 31, 2024, increased by ¥3,521.0 billion, or 20.8%, to ¥20,428.8 billion from the fiscal year ended March 31, 2023, due mainly to increased sales revenue in Automobile business as well as positive foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have increased by approximately ¥2,584.2 billion, or 15.3%, compared to the increase as reported of ¥3,521.0 billion, which includes positive foreign currency translation effects.

Operating Costs and Expenses

Operating costs and expenses increased by ¥2,919.8 billion, or 18.1%, to ¥19,046.8 billion from the previous fiscal year. Cost of sales increased by ¥2,440.5 billion, or 18.0%, to ¥16,016.6 billion from the previous fiscal year, due mainly to increased costs attributable to increased consolidated sales revenue in Automobile business as well as foreign currency effects. Selling, general and administrative expenses increased by ¥436.6 billion, or 26.1%, to ¥2,106.5 billion from the previous fiscal year, due mainly to increased expenses. Research and development expenses increased by ¥42.7 billion, or 4.8%, to ¥923.6 billion from the previous fiscal year.

Operating Profit

Operating profit increased by ¥601.2 billion, or 77.0%, to ¥1,381.9 billion from the previous fiscal year, due mainly to an increase in profit attributable to price and cost impacts as well as sales impacts, which was partially offset by increased expenses. Honda estimates that by excluding positive foreign currency effects of approximately ¥151.1 billion, operating profit would have increased by approximately ¥450.0 billion.

With respect to the discussion above of the changes, management identified factors and used what it believes to be a reasonable method to analyze the respective changes in such factors. Management analyzed changes in these factors at the levels of the Company and its material consolidated subsidiaries.

(1) “Foreign currency effects” consist of “translation adjustments”, which come from the translation of the currency of foreign subsidiaries’ financial statements into Japanese yen, and “foreign currency adjustments”, which result from foreign-currency-denominated transaction. With respect to “foreign currency adjustments”, management analyzed foreign currency adjustments primarily related to the following currencies: U.S. dollar, Japanese yen and others at the level of the Company and its material consolidated subsidiaries.

(2) With respect to “price and cost impacts”, management analyzed effects of changes in sales price, cost reductions, effects of raw material cost fluctuations and others, excluding foreign currency effects.

(3) With respect to “sales impacts”, management analyzed changes in sales volume and mix of product models sold that resulted in increases/decreases in profit, changes in sales revenue of Financial services business that resulted in increases/decreases in profit as well as certain other reasons for increases/decreases in sales revenue and cost of sales, excluding foreign currency effects.

(4) With respect to “expenses”, management analyzed reasons for an increase/decrease in selling, general and administrative expenses from the previous fiscal year excluding foreign currency translation effects.

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(5) With respect to “Research and Development expenses”, management analyzed reasons for an increase/decrease in research and development expenses from the previous fiscal year excluding foreign currency translation effects.

The estimates excluding the foreign currency effects are not on the same basis as Honda’s consolidated financial statements, and do not conform to IFRS. Furthermore, Honda does not believe that these measures are substitute for the disclosure required by IFRS. However, Honda believes that such estimates excluding the foreign currency effects provide financial statements users with additional useful information for understanding Honda’s results.

Profit before Income Taxes

Profit before income taxes increased by ¥762.8 billion, or 86.7%, to ¥1,642.3 billion from the previous fiscal year. The main factors behind this increase, except factors relating to operating profit, are as follows:

Share of profit of investments accounted for using the equity method had a negative impact of ¥6.6 billion, due mainly to decreased profit at affiliates and joint ventures in Asia, which was partially offset by increased profit at affiliates and joint ventures in Japan.

Finance income and finance costs had a positive impact of ¥168.2 billion, due mainly to increased interest income as well as effect from gains or losses on derivatives. For further details, see note “(22) Finance Income and Finance Costs” to the accompanying consolidated financial statements.

Income Tax Expense

Income tax expense increased by ¥297.5 billion, or 183.4%, to ¥459.7 billion from the previous fiscal year. The average effective tax rate increased by 9.6 percentage points to 28.0% from the previous fiscal year, due mainly to the impact of tax benefits resulting from the recognition of deferred tax assets previously unrecognized on tax losses, tax credits and deductible temporary differences in the previous fiscal year. For further details, see “(a) Income Tax Expense” of note “(23) Income Taxes” to the accompanying consolidated financial statements.

Profit for the Year

Profit for the year increased by ¥465.2 billion, or 64.9%, to ¥1,182.5 billion from the previous fiscal year.

Profit for the Year Attributable to Owners of the Parent

Profit for the year attributable to owners of the parent increased by ¥455.7 billion, or 70.0%, to ¥1,107.1 billion from the previous fiscal year.

Profit for the Year Attributable to Non-controlling Interests

Profit for the year attributable to non-controlling interests increased by ¥9.5 billion, or 14.5%, to ¥75.4 billion from the previous fiscal year.

Business Segments

Motorcycle Business

Honda’s consolidated unit sales of motorcycles, all-terrain vehicles (ATVs) and side-by-sides (SxS) totaled 12,219 thousand units, increased by 0.5% from the previous fiscal year, due mainly to increased consolidated unit sales in Europe.

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Sales revenue from external customers increased by ¥311.1 billion, or 10.7%, to ¥3,220.1 billion from the previous fiscal year, due mainly to increased consolidated unit sales as well as positive foreign currency translation effects. Despite changes in sales price, the impact of the price changes was immaterial on sales revenue. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have increased by approximately ¥204.6 billion, or 7.0%, compared to the increase as reported of ¥311.1 billion, which includes positive foreign currency translation effects.

Operating costs and expenses increased by ¥243.6 billion, or 10.1%, to ¥2,663.9 billion from the previous fiscal year. Cost of sales increased by ¥125.8 billion, or 6.0%, to ¥2,225.7 billion, due mainly to an increase in costs attributable to increased consolidated unit sales as well as foreign currency effects. Selling, general and administrative expenses increased by ¥108.0 billion, or 43.5%, to ¥356.4 billion, due mainly to increased expenses including product warranty expenses. Research and development expenses increased by ¥9.7 billion, or 13.6%, to ¥81.6 billion.

Operating profit increased by ¥67.5 billion, or 13.8%, to ¥556.2 billion from the previous fiscal year, due mainly to increased profit attributable to price and cost impacts, which was partially offset by increased expenses including product warranty expenses.

Japan

Total demand for motorcycles in Japan* decreased by around 3% from the previous fiscal year to approximately 390 thousand units in fiscal year 2024.

Honda’s consolidated unit sales in Japan decreased by 2.0% from the previous fiscal year to 241 thousand units in fiscal year 2024, mainly due to decreases in sales units of the PCX and Giorno, despite the effects of launching the new CL 250.

*  Source: JAMA (Japan Automobile Manufacturers Association)

North America

Total demand for motorcycles and all-terrain vehicles (ATVs) in the United States*, the principal market within North America, increased by around 1% from the previous year to approximately 730 thousand units in calendar year 2023.

Honda’s consolidated unit sales in North America increased by 8.5% from the previous fiscal year to 498 thousand units in fiscal year 2024, mainly due to the increases in sales units of the Navi primarily in Mexico.

*  Source: MIC (Motorcycle Industry Council)

  The total includes motorcycles and ATVs, but does not include side-by-sides (SxS).

Europe

Total demand for motorcycles in Europe*1 increased by around 10% from the previous year to approximately 1,180 thousand units in calendar year 2023.

Honda’s consolidated unit sales in Europe substantially increased by 26.8% from the previous fiscal year to 440 thousand units in fiscal year 2024, mainly due to the increase in sales units of the XL750 TRANSALP and CB750 HORNET.

*1 Based on Honda research. Only includes the following 10 countries: the United Kingdom, Germany, France, Italy, Spain, Switzerland, Portugal, the Netherlands, Belgium, and Austria. The total includes ICE vehicles, but does not include EVs, EMs and EBs*2.

*2 EM: Electric Moped with a maximum speed ranging from 25km/h to 50km/h

EB: Electric Bicycle with a maximum speed of 25 km/h or slower

Excluding battery-assisted bicycles

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Asia

Total demand for motorcycles in India*1, the largest market within Asia, increased by around 8% from the previous year to approximately 16,610 thousand units in calendar year 2023. Total demand for motorcycles in other countries in Asia*2 decreased by around 4% from the previous year to approximately 18,470 thousand units in calendar year 2023, mainly due to a decrease in sales units in Pakistan, which offset an increase in sales units in Indonesia.

Honda’s consolidated unit sales in Asia decreased by 1.0% from the previous fiscal year to 9,416 thousand units in fiscal year 2024, mainly due to the decreases in sales units of the Air Blade and Wave series in Vietnam.

Honda’s consolidated unit sales do not include sales by P.T. Astra Honda Motor in Indonesia, which is accounted for using the equity method. Unit sales increased by around 7% from the previous fiscal year to approximately 4,770 thousand units in fiscal year 2024, mainly due to the increases in sales units of the BeAT series and PCX.

*1  Based on Honda research. The total includes ICE vehicles, but does not include EVs, EMs and EBs.

*2  Based on Honda research. Only includes the following seven countries: Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Pakistan, and China. The total includes ICE vehicles, but does not include EVs, EMs and EBs.

Other Regions

Total demand for motorcycles in Brazil*, the principal market within Other Regions, increased by around 13% from the previous year to approximately 1,530 thousand units in calendar year 2023.

Honda’s consolidated unit sales increased by 1.7% from the previous fiscal year to 1,624 thousand units in fiscal year 2024, mainly due to the increases in sales units of the Biz and PCX series in Brazil.

*  Source: ABRACICLO (the Brazilian Association of Motorcycle, Moped, and Bicycle Manufacturers)

Automobile Business

Honda’s consolidated unit sales of automobiles totaled 2,856 thousand units, increased by 19.9% from the previous fiscal year, due mainly to increased consolidated unit sales in North America.

Sales revenue from external customers increased by ¥2,974.0 billion, or 28.1%, to ¥13,567.5 billion from the previous fiscal year, due mainly to increased consolidated unit sales. Despite changes in sales price, the impact of the price changes was immaterial on sales revenue. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have increased by approximately ¥2,330.5 billion, or 22.0%, compared to the increase as reported of ¥2,974.0 billion, which includes positive foreign currency translation effects. Sales revenue including intersegment sales increased by ¥3,009.7billion, or 27.9%, to ¥13,791.5 billion from the previous fiscal year.

Operating costs and expenses increased by ¥2,432.5 billion, or 22.5%, to ¥13,230.8 billion from the previous fiscal year. Cost of sales increased by ¥2,131.7 billion, or 24.3%, to ¥10,909.9 billion, due mainly to an increase in costs attributable to increased consolidated unit sales. Selling, general and administrative expenses increased by ¥268.3 billion, or 21.7%, to ¥1,506.5 billion, due mainly to increased expenses. Research and development expenses increased by ¥32.4 billion, or 4.1%, to ¥814.2 billion.

Operating profit was ¥560.6 billion, an increase of ¥577.2 billion from the previous fiscal year, due mainly to an increase in profit attributable to price and cost impacts as well as sales impacts, which was partially offset by increased expenses.

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Proportion of retail unit sales by vehicle category and principal automobile products:

	Fiscal year ended March 31,
	2023			2024
Passenger cars:		42	%		39	%
ACCORD, CITY, CIVIC, FIT, INTEGRA, JAZZ
Light trucks:		50	%		54	%
BREEZE, CR-V, FREED, HR-V, ODYSSEY, PILOT, VEZEL, ZR-V
Mini vehicles:		8	%		7	%
N-BOX

Although there are various factors that affect the profitability of each vehicle category, sales price is an important factor in determining profitability. In general, the weighted average sales price in the light trucks category is higher relative to the total average sales price, while the weighted average sales price in the mini vehicles category, which is unique to the Japanese market, is relatively lower, although sales price varies from model to model.

In general, the contribution margin of the light trucks category tends to be higher relative to the total weighted average contribution margin because the sales price is higher, while the contribution margin of the mini vehicles category tends to be relatively lower because the sales price is lower, although the level of contribution margin varies from model to model. For example, in Japan and the United States, which are the main sales markets for our automobiles, the contribution margin of our light trucks category was approximately 20% higher, our passenger cars category was at an equivalent level and our mini vehicles category was approximately 65% lower compared with weighted average contribution margin for the fiscal year ended March 31, 2024. It should be noted that we define contribution margin as an amount per unit of net sales minus material cost, which is thought to increase in almost direct proportion to net sales volume.

Japan

Total demand for automobiles in Japan*1 increased by around 3% from the previous fiscal year to approximately 4,520 thousand units in fiscal year 2024.

Honda’s consolidated unit sales in Japan*2 increased by 8.5% from the previous fiscal year to 525 thousand units in fiscal year 2024, mainly due to the effects of launching the new ZR-V and an increase in sales units of the VEZEL.

Honda’s unit production of automobiles in Japan increased by 9.9% from the previous fiscal year to 707 thousand units in fiscal year 2024.

*1  Source: JAMA (Japan Automobile Manufacturers Association), as measured by the number of regular vehicle registrations (661cc or higher) and mini vehicles (660cc or lower)

*2  Certain sales of automobiles that are financed with residual value type auto loans and others by our Japanese finance subsidiaries and provided through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to external customers in the Automobile business. Accordingly, they are not included in consolidated unit sales.

North America

Total demand for automobiles in the United States*, the principal market within North America, increased by around 12% from the previous year to approximately 15,600 thousand units in calendar year 2023.

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Honda’s consolidated unit sales in North America substantially increased by 36.2% from the previous fiscal year to 1,628 thousand units in fiscal year 2024, mainly due to the increases in sales units of the CR-V and CIVIC.

Honda’s unit production of automobiles in North America substantially increased by 28.1% from the previous fiscal year to 1,600 thousand units in fiscal year 2024.

*  Source: Autodata

Europe

Total demand for automobiles in Europe* increased by around 14% from the previous year to approximately 12,840 thousand units in calendar year 2023.

Honda’s consolidated unit sales in Europe substantially increased by 22.6% from the previous fiscal year to 103 thousand units in fiscal year 2024, mainly due to the effects of launching the new ZR-V and an increase in sales units of the HR-V.

*  Source: ACEA (Association des Constructeurs Europeens d’Automobiles (the European Automobile Manufacturers’ Association)) New passenger car registrations cover 27 EU countries, three EFTA countries, and the U.K.

Asia

Total demand for automobiles in Asia*1 increased by around 6% from the previous year to approximately 8,850 thousand units in calendar year 2023, mainly due to the increases in demand in India and Malaysia. Total demand for automobiles in China*2 increased by around 12% from the previous year to approximately 30,090 thousand units in calendar year 2023.

Honda’s consolidated unit sales in Asia decreased by 7.3% from the previous fiscal year to 468 thousand units in fiscal year 2024, mainly due to the decreases in sales units of the BRIO and BR-V in Indonesia.

Honda’s consolidated unit sales do not include unit sales of Dongfeng Honda Automobile Co., Ltd. and GAC Honda Automobile Co., Ltd., both of which are joint ventures accounted for using the equity method in China. Unit sales decreased by 4.4% from the previous fiscal year to 1,185 thousand units in fiscal year 2024, mainly due to the decreases in sales units of the ACCORD and VEZEL.

Honda’s unit production by consolidated subsidiaries in Asia*3 increased by 0.5% from the previous fiscal year to 559 thousand units in fiscal year 2024.

Meanwhile, unit production by Chinese joint ventures Dongfeng Honda Automobile Co., Ltd. and GAC Honda Automobile Co., Ltd. decreased by 11.0% from the previous fiscal year to 1,163 thousand units in fiscal year 2024.

*1  The total is based on Honda research and includes the following eight countries: Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Taiwan, India, and Pakistan.

*2  Source: CAAM (China Association of Automobile Manufacturers)

*3  The total includes the following seven countries: Thailand, Indonesia, Malaysia, Vietnam, Taiwan, India, and Pakistan.

Other Regions

Total demand for automobiles in Brazil*, the principal market within Other Regions, increased by around 11% from the previous year to approximately 2,180 thousand units in calendar year 2023.

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Honda’s consolidated unit sales increased by 15.8% from the previous fiscal year to 132 thousand units in fiscal year 2024, mainly due to the increases in sales units of the HR-V in Brazil.

Unit production at Honda’s plant in Brazil increased by 17.4% from the previous fiscal year to 77 thousand units in fiscal year 2024.

*  Source: ANFAVEA (Associação Nacional dos Fabricantes de Veiculos Automotores (the Brazilian Automobile Association)) The total includes passenger cars and light commercial vehicles.

Financial Services Business

To support the sale of its products, Honda provides retail lending and leasing to customers and wholesale financing to dealers through its finance subsidiaries in Japan, the United States, Canada, the United Kingdom, Germany, Brazil and Thailand.

Total amount of receivables from financial services and equipment on operating leases of finance subsidiaries on March 31, 2024, increased by ¥2,756.9 billion, or 26.0%, to ¥13,378.0 billion from March 31, 2023. Honda estimates that by applying Japanese yen exchange rates as of March 31, 2023, total amount of receivables from financial services and equipment on operating leases of finance subsidiaries as of March 31, 2024 would have increased by approximately ¥1,343.9 billion, or 12.7%, from March 31, 2023.

Sales revenue from external customers increased by ¥294.7 billion, or 10.0%, to ¥3,248.8 billion from the previous fiscal year, due mainly to increased revenue from retail loans as well as positive foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have increased by approximately ¥123.9 billion, or 4.2%, compared to the increase as reported of ¥294.7 billion, which includes positive foreign currency translation effects. Sales revenue including intersegment sales increased by ¥295.6 billion, or 10.0%, to ¥3,251.7 billion from the previous fiscal year.

Operating costs and expenses increased by ¥307.5 billion, or 11.5%, to ¥2,977.8 billion from the previous fiscal year. Cost of sales increased by ¥261.1 billion, or 10.3%, to ¥2,805.3 billion from the previous fiscal year, due mainly to an increase in costs attributable to increased revenue from retail loans as well as foreign currency effects. Selling, general and administrative expenses increased by ¥46.3 billion, or 36.8%, to ¥172.4 billion from the previous fiscal year, due mainly to increased expenses.

Operating profit decreased by ¥11.8 billion, or 4.2%, to ¥273.9 billion from the previous fiscal year, due mainly to increased expenses, which was partially offset by positive foreign currency effects.

Power Products and Other Businesses

Honda’s consolidated unit sales of power products totaled 3,812 thousand units, decreased by 32.5% from the previous fiscal year, due mainly to decreased consolidated unit sales in North America.

Sales revenue from external customers decreased by ¥58.8 billion, or 13.0%, to ¥392.2 billion from the previous fiscal year, due mainly to decreased consolidated unit sales in Power products business. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have decreased by approximately ¥74.8 billion, or 16.6%, compared to the decrease as reported of ¥58.8 billion, which includes positive foreign currency translation effects. Sales revenue including intersegment sales decreased by ¥54.1 billion, or 11.4%, to ¥422.3 billion from the previous fiscal year.

Operating costs and expenses decreased by ¥22.3 billion, or 4.9%, to ¥431.2 billion from the previous fiscal year. Cost of sales decreased by ¥36.7 billion, or 9.9%, to ¥332.5 billion, due mainly to a decrease in costs

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attributable to decreased consolidated unit sales in Power products business. Selling, general and administrative expenses increased by ¥13.8 billion, or 24.2%, to ¥71.0 billion, due mainly to increased expenses. Research and development expenses increased by ¥0.5 billion, or 1.9%, to ¥27.6 billion from the previous fiscal year.

Operating loss was ¥8.8 billion, a decrease of ¥31.7 billion from the previous fiscal year, due mainly to decreased profit attributable to sales impacts in Power products business. In addition, operating loss of aircraft and aircraft engines included in Power products and other businesses was ¥32.9 billion, an increase of ¥7.1 billion from the previous fiscal year.

Japan

Honda’s consolidated unit sales in Japan decreased by 19.7% from the previous fiscal year to 302 thousand units in fiscal year 2024, mainly due to a decrease in sales units of OEM engines*.

*  OEM (Original Equipment Manufacturer) engines refer to engines installed on products sold under a third-party brand.

North America

Honda’s consolidated unit sales in North America substantially decreased by 52.4% from the previous fiscal year to 1,083 thousand units in fiscal year 2024, mainly due to a decrease in sales units of OEM engines.

Europe

Honda’s consolidated unit sales in Europe substantially decreased by 32.0% from the previous fiscal year to 794 thousand units in fiscal year 2024, mainly due to a decrease in sales units of OEM engines.

Asia

Honda’s consolidated unit sales in Asia decreased by 8.1% from the previous fiscal year to 1,294 thousand units in fiscal year 2024, mainly due to a decrease in sales units of OEM engines.

Other Regions

Honda’s consolidated unit sales in Other Regions decreased by 19.1% from the previous fiscal year to 339 thousand units in fiscal year 2024, mainly due to the decreases in sales units of lawn mowers and OEM engines.

Geographical Information Based on the Location of the Company and Its Subsidiaries

As of and for the year ended March 31, 2023

	Yen (millions)
	Japan		North America		Europe			Asia		Other Regions		Total		Reconciling Items			Consolidated
Sales revenue	¥	4,548,002	¥	9,416,252	¥	703,718		¥	4,857,837	¥	819,615	¥	20,345,424	¥	(3,437,699	)	¥	16,907,725
Operating profit (loss)	¥	25,821	¥	258,805	¥	(2,556	)	¥	408,728	¥	58,935	¥	749,733	¥	31,036		¥	780,769

As of and for the year ended March 31, 2024

	Yen (millions)
	Japan		North America		Europe			Asia		Other Regions		Total		Reconciling Items			Consolidated
Sales revenue	¥	5,392,760	¥	12,073,777	¥	966,320		¥	5,009,961	¥	1,081,946	¥	24,524,764	¥	(4,095,962	)	¥	20,428,802
Operating profit (loss)	¥	151,070	¥	694,940	¥	60,340		¥	397,804	¥	153,957	¥	1,458,111	¥	(76,134	)	¥	1,381,977

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Explanatory notes:

1. Major countries in each geographic area:

North America	United States, Canada, Mexico
Europe	United Kingdom, Germany, Belgium, Italy, France
Asia	Thailand, China, India, Vietnam, Indonesia
Other Regions	Brazil, Australia

2. Operating profit (loss) of each geographical region is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs.

3. Reconciling items are elimination of inter-geographic transactions.

Japan

In Japan, sales revenue from domestic and export sales increased by ¥844.7 billion, or 18.6%, to ¥5,392.7 billion from the previous fiscal year, due mainly to increased sales revenue in Automobile business. Operating profit increased by ¥125.2 billion, or 485.1%, to ¥151.0 billion from the previous fiscal year, due mainly to increased profit attributable to sales impacts as well as positive foreign currency effects, which was partially offset by increased expenses including product warranty expenses.

North America

In North America, where the United States is the principal market, sales revenue increased by ¥2,657.5 billion, or 28.2%, to ¥12,073.7 billion from the previous fiscal year, due mainly to increased sales revenue in Automobile business as well as positive foreign currency translation effects. Operating profit increased by ¥436.1 billion, or 168.5%, to ¥694.9 billion from the previous fiscal year, due mainly to an increase in profit attributable to sales impacts as well as price and cost impacts, which was partially offset by increased expenses.

Europe

In Europe, sales revenue increased by ¥262.6 billion, or 37.3%, to ¥966.3 billion from the previous fiscal year, due mainly to increased sales revenue in the Motorcycle business and Automobile business. Operating profit was ¥60.3 billion, an increase of ¥62.8 billion from the previous fiscal year, due mainly to increased profit attributable to price and cost impacts.

Asia

In Asia, sales revenue increased by ¥152.1 billion, or 3.1%, to ¥5,009.9 billion from the previous fiscal year, due mainly to positive foreign currency translation effects which was partially offset by decreased sales revenue in Motorcycle business and Power products business. Operating profit decreased by ¥10.9 billion, or 2.7%, to ¥397.8 billion from the previous fiscal year, due mainly to decreased profit attributable to sales impacts and increased expenses, which was partially offset by increased profit attributable to price and cost impacts.

Other Regions

In Other Regions, sales revenue increased by ¥262.3 billion, or 32.0%, to ¥1,081.9 billion from the previous fiscal year, due mainly to increased sales revenue in the Motorcycle business and Automobile business. Operating profit increased by ¥95.0 billion, or 161.2%, to ¥153.9 billion from the previous fiscal year, due mainly to an increase in profit attributable to price and cost impacts as well as sales impacts, which was partially offset by increased expenses.

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Fiscal Year 2023 Compared with Fiscal Year 2022

Sales Revenue

Honda’s consolidated sales revenue for the fiscal year ended March 31, 2023, increased by ¥2,355.0 billion, or 16.2%, to ¥16,907.7 billion from the fiscal year ended March 31, 2022, due mainly to increased sales revenue in Motorcycle business as well as positive foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have increased by approximately ¥253.2 billion, or 1.7%, compared to the increase as reported of ¥2,355.0 billion, which includes positive foreign currency translation effects.

Operating Costs and Expenses

Operating costs and expenses increased by ¥2,445.4 billion, or 17.9%, to ¥16,126.9 billion from the previous fiscal year. Cost of sales increased by ¥2,008.2 billion, or 17.4%, to ¥13,576.1 billion from the previous fiscal year, due mainly to an increase in costs attributable to increased consolidated sales revenue in Motorcycle business as well as foreign currency effects. Selling, general and administrative expenses increased by ¥343.4 billion, or 25.9%, to ¥1,669.9 billion from the previous fiscal year, due mainly to an increase in expenses including product warranty expenses as well as foreign currency effects. Research and development expenses increased by ¥93.8 billion, or 11.9%, to ¥880.9 billion from the previous fiscal year.

Operating Profit

Operating profit decreased by ¥90.4 billion, or 10.4%, to ¥780.7 billion from the previous fiscal year, due mainly to decreased profit attributable to sales impacts and increased expenses including product warranty expenses, which was partially offset by positive foreign currency effects. Honda estimates that by excluding positive foreign currency effects of approximately ¥295.9 billion, operating profit would have decreased by approximately ¥386.3 billion.

With respect to the discussion above of the changes, management identified factors and used what it believes to be a reasonable method to analyze the respective changes in such factors. Management analyzed changes in these factors at the levels of the Company and its material consolidated subsidiaries.

(1) “Foreign currency effects” consist of “translation adjustments”, which come from the translation of the currency of foreign subsidiaries’ financial statements into Japanese yen, and “foreign currency adjustments”, which result from foreign-currency-denominated transaction. With respect to “foreign currency adjustments”, management analyzed foreign currency adjustments primarily related to the following currencies: U.S. dollar, Japanese yen and others at the level of the Company and its material consolidated subsidiaries.

(2) With respect to “price and cost impacts”, management analyzed effects of changes in sales price, cost reductions, effects of raw material cost fluctuations and others, excluding foreign currency effects.

(3) With respect to “sales impacts”, management analyzed changes in sales volume and mix of product models sold that resulted in increases/decreases in profit, changes in sales revenue of Financial services business that resulted in increases/decreases in profit as well as certain other reasons for increases/decreases in sales revenue and cost of sales, excluding foreign currency effects.

(4) With respect to “expenses”, management analyzed reasons for an increase/decrease in selling, general and administrative expenses from the previous fiscal year excluding foreign currency translation effects.

(5) With respect to “Research and Development expenses”, management analyzed reasons for an increase/decrease in research and development expenses from the previous fiscal year excluding foreign currency translation effects.

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The estimates excluding the foreign currency effects are not on the same basis as Honda’s consolidated financial statements, and do not conform to IFRS. Furthermore, Honda does not believe that these measures are substitute for the disclosure required by IFRS. However, Honda believes that such estimates excluding the foreign currency effects provide financial statements users with additional useful information for understanding Honda’s results.

Profit before Income Taxes

Profit before income taxes decreased by ¥190.6 billion, or 17.8%, to ¥879.5 billion from the previous fiscal year. The main factors behind this decrease, except factors relating to operating profit, are as follows:

Share of profit of investments accounted for using the equity method had a negative impact of ¥85.0 billion, due mainly to recognition of impairment losses on certain investments accounted for using the equity method.

Finance income and finance costs had a negative impact of ¥15.0 billion, due mainly to effect from gains or losses on derivatives as well as effect from gains or losses on foreign exchange, which was partially offset by increased interest income. For further details, see note “(22) Finance Income and Finance Costs” to the accompanying consolidated financial statements.

Income Tax Expense

Income tax expense decreased by ¥147.2 billion, or 47.6%, to ¥162.2 billion from the previous fiscal year. The average effective tax rate decreased by 10.5 percentage points to 18.4% from the previous fiscal year. The benefits of deferred taxes in Japan for the fiscal year ended March 31, 2023, include tax benefits of ¥96.1 billion resulting from the recognition of deferred tax assets previously unrecognized on tax losses, tax credits and deductible temporary differences in the consolidated group under the Japanese Group Relief System, which consists of the Company and its certain consolidated subsidiaries in Japan. We consider it probable that future taxable profit in the consolidated group would be available considering its taxable profits for the past two consecutive years and the expected increase of the Company’s profits in response to the increase in Honda’s consolidated unit sales of automobiles in Japan and foreign countries for the future years. For further details, see “(a) Income Tax Expense” of note “(23) Income Taxes” to the accompanying consolidated financial statements.

Profit for the Year

Profit for the year decreased by ¥43.3 billion, or 5.7%, to ¥717.3 billion from the previous fiscal year.

Profit for the Year Attributable to Owners of the Parent

Profit for the year attributable to owners of the parent decreased by ¥55.6 billion, or 7.9%, to ¥651.4 billion from the previous fiscal year.

Profit for the Year Attributable to Non-controlling Interests

Profit for the year attributable to non-controlling interests increased by ¥12.2 billion, or 22.9%, to ¥65.8 billion from the previous fiscal year.

Business Segments

Motorcycle Business

Honda’s consolidated unit sales of motorcycles, all-terrain vehicles (ATVs) and side-by-sides (SxS) totaled 12,161 thousand units, increased by 13.4% from the previous fiscal year, due mainly to an increase in consolidated unit sales in all regions.

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Sales revenue from external customers increased by ¥723.7 billion, or 33.1%, to ¥2,908.9 billion from the previous fiscal year, due mainly to increased consolidated unit sales as well as positive foreign currency translation effects. Despite changes in sales price, the impact of the price changes was immaterial on sales revenue. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have increased by approximately ¥393.2 billion, or 18.0%, compared to the increase as reported of ¥723.7 billion, which includes positive foreign currency translation effects.

Operating costs and expenses increased by ¥546.5 billion, or 29.2%, to ¥2,420.2 billion from the previous fiscal year. Cost of sales increased by ¥489.8 billion, or 30.4%, to ¥2,099.9 billion, due mainly to an increase in costs attributable to increased consolidated unit sales as well as foreign currency effects. Selling, general and administrative expenses increased by ¥53.9 billion, or 27.7%, to ¥248.4 billion, due mainly to an increase in expenses. Research and development expenses increased by ¥2.7 billion, or 4.0%, to ¥71.8 billion.

Operating profit increased by ¥177.2 billion, or 56.9%, to ¥488.7 billion from the previous fiscal year, due mainly to an increase in profit attributable to price and cost impacts, and sales impacts as well as positive foreign currency effects.

Japan

Total demand for motorcycles in Japan* was approximately 400 thousand units in fiscal year 2023, a decrease of approximately 4% from the previous fiscal year.

Honda’s consolidated unit sales in Japan increased by 0.8% from the previous fiscal year to 246 thousand units in fiscal year 2023, mainly due to the effects of launching the new Dax 125 model and an increase in sales units of the Super Cub 110 model.

*  Source: JAMA (Japan Automobile Manufacturers Association)

North America

Total demand for motorcycles and all-terrain vehicles (ATVs) in the United States*, the principal market within North America, decreased by around 6% from the previous year to approximately 730 thousand units in calendar year 2022.

Honda’s consolidated unit sales in North America increased by 5.0% from the previous fiscal year to 459 thousand units in fiscal year 2023, mainly due to the increases in sales units of the Navi and Dio models primarily in Mexico.

*  Source: MIC (Motorcycle Industry Council) The total includes motorcycles and ATVs, but does not include side-by-sides (SxS).

Europe

Total demand for motorcycles in Europe* remained basically unchanged from the previous year at approximately 1,080 thousand units in calendar year 2022.

Honda’s consolidated unit sales in Europe increased by 9.5% from the previous fiscal year to 347 thousand units in fiscal year 2023, mainly due to an increase in sales units of the PCX model.

*  Based on Honda research. Only includes the following 10 countries: the United Kingdom, Germany, France, Italy, Spain, Switzerland, Portugal, the Netherlands, Belgium, and Austria.

Asia

Total demand for motorcycles in India*1, the largest market within Asia, increased by around 6% from the previous year to approximately 15,360 thousand units in calendar year 2022. Total demand for motorcycles in

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other countries in Asia*2 remained basically unchanged from the previous year at approximately 19,890 thousand units in calendar year 2022, mainly due to an increase in sales units in Vietnam, which offset a decrease in sales units in China.

Honda’s consolidated unit sales in Asia were 9,512 thousand units in fiscal year 2023, an increase by 14.8% from the previous fiscal year, mainly due to the increases in sales units of the Activa model series in India and the Wave model series in Vietnam.

Honda’s consolidated unit sales do not include sales by P.T. Astra Honda Motor in Indonesia, which is accounted for using the equity method. P.T. Astra Honda Motor’s unit sales increased by around 15% from the previous fiscal year to approximately 4,480 thousand units in fiscal year 2023, mainly due to the increases in sales units of the BeAT and Vario model series.

*1  Based on Honda research.

*2  Based on Honda research. Only includes the following seven countries: Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Pakistan, and China.

Other Regions

Total demand for motorcycles in Brazil*, the principal market within Other Regions, increased by around 19% from the previous year to approximately 1,350 thousand units in calendar year 2022.

Honda’s consolidated unit sales increased by 10.9% from the previous fiscal year to 1,597 thousand units in fiscal year 2023, mainly due to the increases in sales units of the CG160 and Biz model series in Brazil.

*  Source: ABRACICLO (the Brazilian Association of Motorcycle, Moped, and Bicycle Manufacturers)

Automobile Business

Honda’s consolidated unit sales of automobiles totaled 2,382 thousand units, decreased by 1.7% from the previous fiscal year, due mainly to a decrease in consolidated unit sales in North America.

Sales revenue from external customers increased by ¥1,446.0 billion, or 15.8%, to ¥10,593.5 billion from the previous fiscal year, due mainly to positive foreign currency translation effects. Despite changes in sales price, the impact of the price changes was immaterial on sales revenue. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have increased by approximately ¥141.4 billion, or 1.5%, compared to the increase as reported of ¥1,446.0 billion, which includes positive foreign currency translation effects. Sales revenue including intersegment sales increased by ¥1,421.1 billion, or 15.2%, to ¥10,781.7 billion from the previous fiscal year.

Operating costs and expenses increased by ¥1,673.9 billion, or 18.3%, to ¥10,798.3 billion from the previous fiscal year. Cost of sales increased by ¥1,330.7 billion, or 17.9%, to ¥8,778.2 billion, due mainly to foreign currency effects. Selling, general and administrative expenses increased by ¥251.5 billion, or 25.5%, to ¥1,238.2 billion, due mainly to an increase in expenses including product warranty expenses as well as foreign currency effects. Research and development expenses increased by ¥91.6 billion, or 13.3%, to ¥781.8 billion.

Operating loss was ¥16.6 billion, a decrease of ¥252.8 billion from the previous fiscal year, due mainly to decreased profit attributable to sales impacts and increased expenses including product warranty expenses, which was partially offset by positive foreign currency effects.

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Proportion of retail unit sales by vehicle category and principal automobile products:

	Fiscal year ended March 31,
	2022			2023
Passenger cars:		42	%		42	%
ACCORD, BRIO, CITY, CIVIC, FIT, INTEGRA, JAZZ
Light trucks:		52	%		50	%
BREEZE, CR-V, FREED, HR-V, ODYSSEY, PILOT, VEZEL, XR-V, ZR-V
Mini vehicles:		6	%		8	%
N-BOX

Although there are various factors that affect the profitability of each vehicle category, sales price is an important factor in determining profitability. In general, the weighted average sales price in the light trucks category is higher relative to the total average sales price, while the weighted average sales price in the mini vehicles category, which is unique to the Japanese market, is relatively lower, although sales price varies from model to model.

In general, the contribution margin of the light trucks category tends to be higher relative to the total weighted average contribution margin because the sales price is higher, while the contribution margin of the mini vehicles category tends to be relatively lower because the sales price is lower, although the level of contribution margin varies from model to model. For example, in Japan and the United States, which are the main sales markets for our automobiles, the contribution margin of our light trucks category was approximately 25% higher, our passenger cars category was approximately 5% lower and our mini vehicles category was approximately 65% lower than total weighted average contribution margin for the fiscal year ended March 31, 2023. It should be noted that we define contribution margin as an amount per unit of net sales minus material cost, which is thought to increase in almost direct proportion to net sales volume.

Japan

Total demand for automobiles in Japan*1 increased by around 4% from the previous fiscal year to approximately 4,380 thousand units in fiscal year 2023.

Honda’s consolidated unit sales in Japan*2 increased by 1.7% from the previous fiscal year to 484 thousand units in fiscal year 2023, mainly due to an increase in sales units of the N-BOX model, despite the impacts of the semiconductor supply shortage.

Honda’s unit production of automobiles in Japan increased by 1.4% from the previous fiscal year to 643 thousand units in fiscal year 2023.

*1  Source: JAMA (Japan Automobile Manufacturers Association), as measured by the number of regular vehicle registrations (661cc or higher) and mini vehicles (660cc or lower)

*2  Certain sales of automobiles that are financed with residual value type auto loans and others by our Japanese finance subsidiaries and provided through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to external customers in the Automobile business. Accordingly, they are not included in consolidated unit sales.

North America

Total demand for automobiles in the United States*, the principal market within North America, decreased by around 8% from the previous year to approximately 13,890 thousand units in calendar year 2022.

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Honda’s consolidated unit sales in North America decreased by 6.9% from the previous fiscal year to 1,195 thousand units in fiscal year 2023, mainly due to the decreases in sales units of the HR-V and CIVIC models, attributable to the impacts of the semiconductor supply shortage.

Honda’s unit production of automobiles in North America decreased by 1.7% from the previous fiscal year to 1,249 thousand units in fiscal year 2023.

*  Source: Autodata

Europe

Total demand for automobiles in Europe* decreased by around 4% from the previous year to approximately 11,280 thousand units in calendar year 2022.

Honda’s consolidated unit sales in Europe decreased by 16.0% from the previous fiscal year to 84 thousand units in fiscal year 2023, mainly due to a decrease in sales units of the CIVIC model.

*  Source: ACEA (Association des Constructeurs Europeens d’Automobiles (the European Automobile Manufacturers’ Association)) New passenger car registrations cover 27 EU countries, three EFTA countries, and the U.K.

Asia

Total demand for automobiles in Asia*1 increased by around 18% from the previous year to approximately 8,340 thousand units in calendar year 2022. This was mainly due to the increases in demand in India and Malaysia. Total demand for automobiles in China*2 increased by around 2% from the previous year to approximately 26,860 thousand units in calendar year 2022.

Honda’s consolidated unit sales in Asia increased by 14.0% from the previous fiscal year to 505 thousand units in fiscal year 2023, mainly due to the increases in sales units of the BR-V and BRIO models in Indonesia.

Honda’s consolidated unit sales do not include unit sales of Dongfeng Honda Automobile Co., Ltd. and GAC Honda Automobile Co., Ltd., both of which are joint ventures accounted for using the equity method in China. Unit sales in China substantially decreased by 21.5% from the previous fiscal year to 1,240 thousand units in fiscal year 2023, mainly due to the decreases in sales units of the XR-V and VEZEL models, attributable to the impacts of the semiconductor supply shortage.

Honda’s unit production by consolidated subsidiaries in Asia*3 increased by 14.1% from the previous fiscal year to 556 thousand units in fiscal year 2023.

Meanwhile, unit production by Chinese joint ventures Dongfeng Honda Automobile Co., Ltd. and GAC Honda Automobile Co., Ltd. decreased by 19.4% from the previous fiscal year to 1,306 thousand units in fiscal year 2023.

*1  The total is based on Honda research and includes the following eight countries: Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Taiwan, India, and Pakistan.

*2  Source: CAAM (China Association of Automobile Manufacturers)

*3  The total includes the following seven countries: Thailand, Indonesia, Malaysia, Vietnam, Taiwan, India, and Pakistan.

Other Regions

Total demand for automobiles in Brazil*, the principal market within Other Regions, decreased by around 1% from the previous year to approximately 1,960 thousand units in calendar year 2022.

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Honda’s consolidated unit sales decreased by 6.6% from the previous fiscal year to 114 thousand units in fiscal year 2023, mainly due to a decrease in sales units of the CIVIC model, which offset an increase in sales units of the CITY model in Brazil.

Unit production at Honda’s plant in Brazil substantially decreased by 21.4% from the previous fiscal year to 66 thousand units in fiscal year 2023.

*  Source: ANFAVEA (Associação Nacional dos Fabricantes de Veiculos Automotores (the Brazilian Automobile Association)) The total includes passenger cars and light commercial vehicles.

Financial Services Business

To support the sale of its products, Honda provides retail lending and leasing to customers and wholesale financing to dealers through its finance subsidiaries in Japan, the United States, Canada, the United Kingdom, Germany, Brazil and Thailand.

Total amount of receivables from financial services and equipment on operating leases of finance subsidiaries on March 31, 2023, increased by ¥27.4 billion, or 0.3%, to ¥10,621.0 billion from March 31, 2022. Honda estimates that by applying Japanese yen exchange rates as of March 31, 2022, total amount of receivables from financial services and equipment on operating leases of finance subsidiaries as of March 31, 2023 would have decreased by approximately ¥650.4 billion, or 6.1%, from March 31, 2022.

Sales revenue from external customers increased by ¥133.4 billion, or 4.7%, to ¥2,954.0 billion from the previous fiscal year, due mainly to positive foreign currency translation effects, which was partially offset by decreased operating lease income. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have decreased by approximately ¥289.0 billion, or 10.2%, compared to the increase as reported of ¥133.4 billion, which includes positive foreign currency translation effects. Sales revenue including intersegment sales increased by ¥132.8 billion, or 4.7%, to ¥2,956.1 billion from the previous fiscal year.

Operating costs and expenses increased by ¥179.9 billion, or 7.2%, to ¥2,670.2 billion from the previous fiscal year. Cost of sales increased by ¥145.0 billion, or 6.0%, to ¥2,544.2 billion from the previous fiscal year, due mainly to foreign currency effects, which was partially offset by a decrease in costs attributable to decreased operating lease income. Selling, general and administrative expenses increased by ¥34.9 billion, or 38.3%, to ¥126.0 billion from the previous fiscal year, due mainly to foreign currency effects.

Operating profit decreased by ¥47.1 billion, or 14.2%, to ¥285.8 billion from the previous fiscal year, due mainly to a decrease in profit attributable to decreased sales revenue, which was partially offset by positive foreign currency effects.

Power Products and Other Businesses

Honda’s consolidated unit sales of power products totaled 5,645 thousand units, decreased by 9.0% from the previous fiscal year, due mainly to a decrease in consolidated unit sales in North America.

Sales revenue from external customers increased by ¥51.8 billion, or 13.0%, to ¥451.1 billion from the previous fiscal year, due mainly to positive foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, sales revenue for the year would have increased by approximately ¥7.6 billion, or 1.9%, compared to the increase as reported of ¥51.8 billion, which includes positive foreign currency translation effects. Sales revenue including intersegment sales increased by ¥54.6 billion, or 13.0%, to ¥476.4 billion from the previous fiscal year.

Operating costs and expenses increased by ¥22.3 billion, or 5.2%, to ¥453.6 billion from the previous fiscal year. Cost of sales increased by ¥19.8 billion, or 5.7%, to ¥369.2 billion, due mainly to foreign currency effects.

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Selling, general and administrative expenses increased by ¥2.9 billion, or 5.5%, to ¥57.2 billion, due mainly to foreign currency effects, which was partially offset by decreased expenses. Research and development expenses decreased by ¥0.4 billion, or 1.8%, to ¥27.1 billion from the previous fiscal year.

Operating profit was ¥22.8 billion, an increase of ¥32.3 billion from the previous fiscal year, due mainly to increased profit attributable to sales impacts as well as positive foreign currency effects. In addition, operating loss of aircraft and aircraft engines included in Power products and other businesses was ¥25.7 billion, an improvement of ¥7.9 billion from the previous fiscal year, due mainly to decreased operating costs, which was partially offset by decreased profit attributable to negative foreign currency translation effects.

Japan

Honda’s consolidated unit sales in Japan increased by 6.5% from the previous fiscal year to 376 thousand units in fiscal year 2023, mainly due to an increase in sales units of OEM engines*.

*  OEM (Original Equipment Manufacturer) engines refer to engines installed on products sold under a third-party brand.

North America

Honda’s consolidated unit sales in North America decreased by 16.9% from the previous fiscal year to 2,274 thousand units in fiscal year 2023, mainly due to a decrease in sales units of OEM engines.

Europe

Honda’s consolidated unit sales in Europe decreased by 1.8% from the previous fiscal year to 1,168 thousand units in fiscal year 2023, mainly due to a decrease in sales units of OEM engines, which offset an increase in the sales units of generators.

Asia

Honda’s consolidated unit sales in Asia decreased by 5.3% from the previous fiscal year to 1,408 thousand units in fiscal year 2023, mainly due to a decrease in sales units of OEM engines.

Other Regions

Honda’s consolidated unit sales in Other Regions decreased by 3.2% from the previous fiscal year to 419 thousand units in fiscal year 2023, mainly due to a decrease in sales units of OEM engines.

Geographical Information Based on the Location of the Company and Its Subsidiaries

As of and for the year ended March 31, 2022

	Yen (millions)
	Japan		North America		Europe		Asia		Other Regions		Total		Reconciling Items			Consolidated
Sales revenue	¥	4,359,286	¥	8,090,187	¥	701,211	¥	4,055,447	¥	593,139	¥	17,799,270	¥	(3,246,574	)	¥	14,552,696
Operating profit (loss)	¥	6,411	¥	501,073	¥	26,681	¥	339,129	¥	22,899	¥	896,193	¥	(24,961	)	¥	871,232

As of and for the year ended March 31, 2023

	Yen (millions)
	Japan		North America		Europe			Asia		Other Regions		Total		Reconciling Items			Consolidated
Sales revenue	¥	4,548,002	¥	9,416,252	¥	703,718		¥	4,857,837	¥	819,615	¥	20,345,424	¥	(3,437,699	)	¥	16,907,725
Operating profit (loss)	¥	25,821	¥	258,805	¥	(2,556	)	¥	408,728	¥	58,935	¥	749,733	¥	31,036		¥	780,769

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Explanatory notes:

1. Major countries in each geographic area:

North America	United States, Canada, Mexico
Europe	United Kingdom, Germany, Belgium, Italy, France
Asia	Thailand, China, India, Vietnam, Indonesia
Other Regions	Brazil, Australia

2. Operating profit (loss) of each geographical region is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs.

3. Reconciling items are elimination of inter-geographic transactions.

Japan

In Japan, sales revenue from domestic and export sales increased by ¥188.7 billion, or 4.3%, to ¥4,548.0 billion from the previous fiscal year, due mainly to increased sales revenue in all businesses. Operating profit increased by ¥19.4 billion, or 302.8%, to ¥25.8 billion from the previous fiscal year, due mainly to positive foreign currency effects, which was partially offset by a decrease in profit attributable to price and cost impacts.

North America

In North America, where the United States is the principal market, sales revenue increased by ¥1,326.0 billion, or 16.4%, to ¥9,416.2 billion from the previous fiscal year, due mainly to positive foreign currency translation effects, which was partially offset by decreased consolidated unit sales in Automobile business as well as decreased operating lease income in Financial services business. Operating profit decreased by ¥242.2 billion, or 48.3%, to ¥258.8 billion from the previous fiscal year, due mainly to decreased profit attributable to sales impacts and increased expenses including product warranty expenses, which was partially offset by positive foreign currency effects.

Europe

In Europe, sales revenue increased by ¥2.5 billion, or 0.4%, to ¥703.7 billion from the previous fiscal year, due mainly to positive foreign currency translation effects, which was partially offset by decreased sales revenue in Automobile business. Operating loss was ¥2.5 billion, a decrease of ¥29.2 billion from the previous fiscal year, due mainly to decreased profit attributable to sales impacts, which was partially offset by increased profit attributable to price and cost impacts.

Asia

In Asia, sales revenue increased by ¥802.3 billion, or 19.8%, to ¥4,857.8 billion from the previous fiscal year, due mainly to increased sales revenue in Motorcycle business as well as positive foreign currency translation effects. Operating profit increased by ¥69.5 billion, or 20.5%, to ¥408.7 billion from the previous fiscal year, due mainly to an increase in profit attributable to price and cost impacts as well as positive foreign currency effects.

Other Regions

In Other Regions, sales revenue increased by ¥226.4 billion, or 38.2%, to ¥819.6 billion from the previous fiscal year, due mainly to increased sales revenue in Motorcycle business as well as positive foreign currency translation effects. Operating profit increased by ¥36.0 billion, or 157.4%, to ¥58.9 billion from the previous fiscal year, due mainly to increased profit attributable to price and cost impacts, which was partially offset by increased expenses.

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B. Liquidity and Capital Resources

Overview of Capital Requirements, Sources and Uses

The policy of Honda is to support its business activities by maintaining sufficient capital resources, a sufficient level of liquidity and a sound balance sheet.

Honda’s main business is the manufacturing and sale of motorcycles, automobiles and power products. To support this business, Honda also funds financial programs for customers and dealers.

Honda requires working capital mainly to purchase parts and raw materials required for production, as well as to maintain inventory of finished products and cover receivables from dealers and for providing financial services. Honda also requires funds for capital expenditures, mainly to introduce new models, upgrade, rationalize and renew production facilities, as well as to expand and reinforce sales and R&D facilities. As a mobility company, Honda must sincerely address the difficult challenges of achieving “zero environmental impact” and “absolute safety”. By realizing the future mobility Honda dreams of and a mobility society people desire, while addressing societal values in the areas of the environment and safety, Honda aspires to chart a new trajectory of growth as a company. Honda will strategically allocate resources according to the business transformation phase to achieve the environment and safety values. Furthermore, keeping an eye on market trends and flexibly changing the timing of investment, Honda plans to invest a total of ¥10 trillion in such as capital expenditures and research and development over the ten years from the fiscal year ended March 31, 2022 to establish a production system for 2 million EVs in 2030. For a description of Honda’s current plans for resource allocation relating to its business strategies, see Item 4.B. “Business Overview—Preparing for the Future—Challenges to be Addressed Preferentially—6. Economic value enhancement—a. Strategic resource allocation according to the business transformation phase.”

Honda meets its working capital requirements primarily through cash generated by operations, bank loans and corporate bonds. In the fiscal year ended March 31, 2022, the Company developed its Sustainable Finance Framework to raise a part of the funds for addressing our environmental and safety initiatives through issuing bonds and issued Green Bonds totaling US$2.75 billion thereunder. The proceeds from the issuance of the Green Bonds are used exclusively toward environmental initiatives in accordance with the Sustainable Finance Framework. Honda believes that its working capital is sufficient for the Company’s present requirements. The year-end balance of liabilities associated with the Company and its subsidiaries’ funding for non-Financial services businesses was ¥863.0 billion as of March 31, 2024. In addition, the Company’s finance subsidiaries fund financial programs for customers and dealers primarily from medium-term notes, bank loans, securitization of finance receivables and equipment on operating leases, commercial paper and corporate bonds. The year-end balance of liabilities associated with these finance subsidiaries’ funding for Financial services business was ¥9,308.5 billion as of March 31, 2024.

There are no material seasonal variations in Honda’s borrowing requirements.

In light of the future situation of working capital requirements and cash on hand, the Company will consider raising funds as needed.

Cash Flows

Fiscal Year 2024 Compared with Fiscal Year 2023

Consolidated cash and cash equivalents on March 31, 2024 increased by ¥1,151.5 billion from March 31, 2023, to ¥4,954.5 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the previous fiscal year, are as follows:

Net cash provided by operating activities amounted to ¥747.2 billion of cash inflows. Cash inflows from operating activities decreased by ¥1,381.7 billion compared with the previous fiscal year, due mainly to an

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increase in payments for parts and raw materials as well as in receivables from financial services, which was partially offset by increased cash received from customers.

Net cash used in investing activities amounted to ¥867.2 billion of cash outflows. Cash outflows from investing activities increased by ¥189.2 billion compared with the previous fiscal year, due mainly to increased payments for acquisitions of investments accounted for using the equity method.

Net cash provided by financing activities amounted to ¥918.6 billion of cash inflows. Cash inflows from financing activities increased by ¥2,387.0 billion compared with the previous fiscal year, due mainly to increased proceeds from financing liabilities.

Fiscal Year 2023 Compared with Fiscal Year 2022

Consolidated cash and cash equivalents on March 31, 2023 increased by ¥128.0 billion from March 31, 2022, to ¥3,803.0 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the previous fiscal year, are as follows:

Net cash provided by operating activities amounted to ¥2,129.0 billion of cash inflows. Cash inflows from operating activities increased by ¥449.4 billion compared with the previous fiscal year, due mainly to increased cash received from customers, which was partially offset by increased payments for parts and raw materials.

Net cash used in investing activities amounted to ¥678.0 billion of cash outflows. Cash outflows from investing activities increased by ¥302.0 billion compared with the previous fiscal year, due mainly to increased payments for additions to property, plant and equipment.

Net cash used in financing activities amounted to ¥1,468.3 billion of cash outflows. Cash outflows from financing activities increased by ¥852.6 billion compared with the previous fiscal year, due mainly to increased repayments of financing liabilities as well as purchases of treasury stock.

Liquidity

The ¥4,954.5 billion in cash and cash equivalents as of March 31, 2024 is mainly denominated in U.S. dollars and in Japanese yen, with the remainder denominated in other currencies.

Honda’s cash and cash equivalents as of March 31, 2024 corresponds to approximately 2.9 months of sales revenue, and Honda believes it has sufficient liquidity for its business operations.

At the same time, Honda is aware of the possibility that various factors, such as recession-induced market contraction and financial and foreign exchange market volatility, may adversely affect liquidity. For this reason, as of March 31, 2024, finance subsidiaries that carry total short-term borrowings of ¥1,192.3 billion have committed lines of credit equivalent to ¥1,461.5 billion that serve as alternative liquidity for the commercial paper issued regularly to replace debt. Honda believes it currently has sufficient credit limits, extended by prominent international banks, as of the date of the filing of Honda’s Form 20-F.

Honda’s financing liabilities as of March 31, 2024 are mainly denominated in U.S. dollars, with the remainder denominated in Japanese yen and in other currencies. For further information regarding financing liabilities, see note “(15) Financing Liabilities” and “(25) Financial Risk Management” to the accompanying consolidated financial statements.

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Honda’s short- and long-term debt securities are rated by credit rating agencies, such as Moody’s Investors Service, Inc., Standard & Poor’s Global Ratings, and Rating and Investment Information, Inc. The following table shows the ratings of Honda’s unsecured debt securities by Moody’s, Standard & Poor’s and Rating and Investment Information as of March 31, 2024.

	Credit ratings for
	Short-term unsecured debt securities		Long-term unsecured debt securities
Moody’s Investors Service		P-2		A3
Standard & Poor’s Global Ratings		A-2		A-
Rating and Investment Information		a-1+		AA

The above ratings are based on information provided by Honda and other information deemed credible by the rating agencies. They are also based on the agencies’ assessment of credit risk associated with designated securities issued by Honda. Each rating agency may use different standards for calculating Honda’s credit rating, and also makes its own assessment. Ratings can be revised or nullified by agencies at any time. These ratings are not meant to serve as a recommendation for trading in or holding Honda’s unsecured debt securities.

Off-Balance Sheet Arrangements

Loan commitments

Honda maintains unused balances on committed lines to dealers based on loan commitment contracts. The undiscounted maximum amount of this potential obligation as of March 31, 2024 was ¥92.3 billion. Although committed lines have been extended, they will not necessarily be withdrawn, as certain contracts contain terms and conditions of withdrawal that require screening of the obligor’s credit standing.

Guarantee of employee loans

As of March 31, 2024, we guaranteed ¥5.0 billion of employee bank loans for their housing costs. If an employee defaults on his/her loan payments, we are required to perform under the guarantee. The undiscounted maximum amount of our potential obligation to make future payments in the event of defaults is ¥5.0 billion. As of March 31, 2024, no amount has been accrued for any estimated losses under the obligations, as it was probable that the employees would be able to make all scheduled payments.

Contractual Obligations

The following table shows our contractual obligations as of March 31, 2024:

	Yen (millions)
			Payments due by period
	Total		Within 1 year		1-3 years		3-5 years		Thereafter
Financing liabilities	¥	10,941,618	¥	4,379,834	¥	4,050,714	¥	1,824,995	¥	686,075
Other financial liabilities		736,378		239,112		166,843		104,716		225,707
Purchase and other commitments*1		108,440		101,068		7,152		220		—
Contributions to defined benefit pension plans*2		38,252		38,252		—		—		—
Total	¥	11,824,688	¥	4,758,266	¥	4,224,709	¥	1,929,931	¥	911,782

*1  Honda had commitments for purchases of property, plant and equipment as of March 31, 2024.

*2  Since contributions beyond the next fiscal year are not currently determinable, contributions to defined benefit pension plans reflect only contributions expected for the next fiscal year.

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C. Research and Development

The Company and its consolidated subsidiaries use the most-advanced technologies and conduct R&D activities with the goal of creating distinctive products that are internationally competitive. Product-related R&D is conducted mainly by the Company, Honda R&D Co., Ltd., and Honda Development and Manufacturing of America, LLC. R&D on production technologies centers around the Company and Honda Development and Manufacturing of America, LLC. All of these entities work in close association with our other entities and businesses in their respective regions.

The Company has created the Electrification Business Development Operations based on the Business Development Operations, which was established in April 2022 to strengthen electrification business, to further strengthen and accelerate Honda’s electrification business. This operation consolidates the business strategy and EV product development functions of Automobile business and electrification-related strategy and development functions of Motorcycle business and Power products business, and Honda will strive to further accelerate its electrification business and create new value by leveraging its broad and expanding range of mobility products and services.

A portion of the R&D expenditures at the Company and its consolidated subsidiaries has been capitalized and recorded as intangible assets. For details regarding R&D expenses recognized in the consolidated statements of income, see note “(21) Research and Development” to the accompanying consolidated financial statements.

R&D activities by segment are as follows.

Please note that the forward-looking statements contained herein are judgments made by Honda as of the filing date of this Annual Report and may differ materially from actual results because of uncertainties that may arise in the future, including those discussed under “Item 3. Key Information—D. Risk Factors.”

Motorcycle Business

In the Motorcycle business, Honda is engaged in research and development activities with the policy of “maximizing the organizational climate of self-challenge and forming a Mono-zukuri (the art of making things) team capable of continually creating products that delight our customers by overcoming changes in the business environment and offering reasonable prices.”

Among major technological achievements, we launched the Shine 100 in India in April 2023, developed with an eye on capturing market share in the region where our competitors have a high market share. The Shine 100 is competitively priced, reflecting our cost reduction efforts through a new engine and frame design.

Moreover, we launched the GIORNO+ in Thailand and the Stylo 160 in Indonesia, aiming to expand AT market share with its modern design, practical specification equipment, and affordable price.

In addition, we have developed the world’s first*1 Honda E-Clutch system, which eliminates the need for the rider to manually operate the clutch lever by automatically controlling the clutch of the multi-gear manual motorcycle transmission. The Honda E-Clutch is electronic control technology that realizes natural and smooth riding through instantaneous, fine-tuned clutch control without the rider needing to operate the clutch lever, for optimum performance in situations where the driving force changes, such as starting, shifting, and stopping gears. Furthermore, to meet a wide range of rider demands, the clutch can be operated manually like a normal manual transmission motorcycle by gripping the clutch lever, even when the clutch is being controlled electronically. The Honda E-Clutch consists of a lightweight and compact system that can be installed in the chassis without major changes to the existing engine layout, and will be successively applied to fun motorcycles for the hobbyist, starting with the CB650R and CBR650R, which have already been launched.

In addition, Honda participated the Dakar Rally 2024, known as “the most dangerous sporting event in the world” and the opening round of the FIM*2 World Rally-Raid Championship held in Saudi Arabia as the Monster

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Energy Honda Team with its works machine, the CRF450 RALLY, and won the overall motorcycle category for the first time since 2021.

As part of our initiatives to achieve zero environmental impact, and to realize carbon neutrality for all of its motorcycle products during the 2040s, Honda revised its 2030 electric motorcycle annual sales target to 4 million units, up 500,000 units from what it announced in September 2022, with the goal of introducing a total of about 30 electric models globally by 2030. We began sales of the EM1 e: electric scooter in Europe, Japan, and Indonesia in 2023.

The EM1 e: is an electric two-wheeled personal commuter, categorized as class 1 motorized bicycle, that uses the Honda Mobile Power Pack e: swappable battery, and it is the first electric motorcycle in Honda’s motorcycle lineup for the general public in Japan.

Moreover, Honda will introduce a new model globally in 2024, based on the SC e: Concept, recently exhibited at the JAPAN MOBILITY SHOW 2023, which will be followed by the global introductions of “FUN-oriented” models and plug-in electric models in 2025. In addition, Honda will introduce electric models in various categories such as super sports, offroad, kids’ bikes and ATVs, accelerating its initiatives to build a full lineup of electric models.

Also, Honda will continue to strengthen its technologies by competing in new electric motorcycle races. For example, Honda announced that Honda Racing Corporation factory team*3, “Team HRC”, will race the CR ELECTRIC PROTO electric motocrosser in the FIM E-Xplorer World Cup, an international electric all-terrain motorcycle racing series.

R&D expenditures in this segment incurred during the fiscal years ended March 31, 2022, 2023 and 2024 were ¥65.8 billion, ¥70.3 billion and ¥79.9 billion, respectively.

*1  according to Honda research (as of October 2023)

*2  Fédération Internationale de Motocyclisme

*3  operated by manufacturer

Automobile Business

In the Automobile business, Honda is engaged in research and development activities under the policy of “demonstrating collective strength for appealing and strong products, and ensuring continuing growth of the Automobile business by deepening the process of Mono-zukuri.”

Among major achievements, we began sales of the all-new, third-generation N-BOX in October 2023. In addition to a refined exterior design that exudes a greater sense of high quality, the all-new N-BOX features an easy-to-drive and comfortable interior space achieved by carrying forward the spacious cabin to realize an uncluttered field of vision with enhanced sense of openness. Moreover, the all-new N-BOX became the first Honda mini-vehicle model to feature Honda CONNECT, an in-vehicle communication system equipped with new-generation connected technologies, which enables customers to enjoy the use of their vehicle with greater peace of mind and comfort. Furthermore, the all-new N-BOX continues to feature the Honda SENSING advanced safety and driver-assistive technologies as standard equipment on all types, but with two newly added functions, namely Low Speed Brake Function and Unintended Acceleration Mitigation.

In addition, the new India-produced SUV, WR-V was launched in India, Japan and South Africa. The WR-V features dynamic design and performance that will enable any driver to enjoy driving with peace of mind and a sense of trust, as well as the top-level*1 cargo space in its class.

As part of our initiatives to achieve zero environmental impact, we target to make EVs and hydrogen fuel cell electric vehicles (FCEVs) represent 100% of its global vehicle sales by 2040 and plan to introduce EV products tailored to the market characteristics of each region.

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In North America, we launched new EV PROLOGUE and ZDX by Acura in 2024. Both the PROLOGUE and ZDX, which are jointly developed with General Motor Company (GM) and powered by GM’s Ultium battery, will power and accelerate North America’s electrification strategy toward carbon neutrality.

In January 2024, we unveiled the Honda 0 Series, a new EV series Honda will launch globally starting in 2026 at the CES 2024 in Las Vegas, Nevada, the United States. The Honda 0 Series is a new EV series that symbolizes how Honda is undergoing a major transformation in line with its Global Brand Slogan and electrification policy. The series name represents Honda’s determination in taking on this challenge of developing new EV series by going back to the starting point of Honda as an automaker and creating completely new EVs from “zero.” The Honda 0 Series, which will play a key role in the Honda EV strategy, will be a completely new EV series Honda will create from “zero” with a new EV development approach of “Thin, Light, and Wise.” The Honda 0 Series models will be first introduced in North America in 2026, then rolled out globally. Including various models ranging from small to large size, a total of seven models will be launched globally by 2030.

In China, we will introduce a total of ten Honda-brand EV models by 2027 and strive to make EVs represent 100% of our automobile sales by 2035. Honda unveiled the Ye series, a new EV series which will follow the e:N series currently available, continuing to enhance its EV lineup in China.

As next-generation EVs, the Ye series models are being developed in pursuit of more value for customers. In addition to human-centric packaging based on the M/M concept*2, which is the foundation of Honda car design, the Ye series models feature driving performance that further refines the “joy of driving” by applying a newly developed dedicated EV platform developed in China and integrating it with electrification technologies Honda has amassed over many years. As for application of intelligence technologies, including offering of an AI-powered assistant, the Ye series models are being developed with the aim to create a “space” where all occupants can enjoy comfortable mobility.

Regarding small-size EVs, starting with the N-VAN e:, a commercial-use mini-EV that will go on sale in Japan in the fall of 2024, Honda will make sequential introductions of small-size EVs in regions where there is a need for them. This also will include introduction of personal-use mini-EV models in 2025 as well as small EVs that emphasize the “joy of driving,” in 2026. Furthermore, as a part of electrification and enhancing the use of Honda Mobile Power Pack e:, Honda will introduce a micro-mobility product which will be equipped with four Honda Mobile Power Pack e: in Japan before the end of fiscal year 2026.

In addition, Honda positions hydrogen as one of the high-potential energy carriers, along with electricity, and in February 2024, held the world premiere of the production model of the CR-V e:FCEV, an all-new FCEV which is scheduled to go on sale in Japan in the summer 2024. With the introduction of the CR-V e:FCEV, Honda will be the first Japanese automaker*3 to launch an FCEV model featuring a plug-in charging function that enables charging of an onboard battery from an external power source. Without compromising the advantages of an FCEV, such as a long driving range and short hydrogen refueling time, the addition of a plug-in feature to charge the battery at home and/or on the go further enhances the convenience of FCEVs.

Honda is striving for zero traffic collision fatalities. In November 2023, we announced the introduction of the new Honda SENSING 360+, omnidirectional safety and driver-assistive system which removes blind spots around the vehicle and contributes to collision avoidance and the reduction of driver burden while driving. In addition to the functions of the current Honda SENSING 360, Honda SENSING 360+ will newly adopt a driver monitoring camera and high-definition maps to improve functions to monitor the driver’s condition and to control the vehicle, respectively, to further reduce driver burden. By reducing health-related or human error-triggered collisions with such new technologies, Honda will strive to offer vehicles which enable everyone to enjoy the freedom of mobility with complete peace of mind and encourage people to want to go out more actively and go farther in their vehicles.

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Honda is planning to begin applying the new Honda SENSING 360+ to Accord which will go on sale in China in 2024 before expanding the application on a global basis.

R&D expenditures in this segment incurred during the fiscal years ended March 31, 2022, 2023 and 2024 were ¥708.1 billion, ¥754.1 billion and ¥869.9 billion, respectively.

*1  in the “compact SUV” class, according to Honda research (as of December 2023)

*2  a basic approach to Honda car design, an approach to increase the efficiency of the vehicle interior by maximizing space for people and minimizing the space required for mechanical components.

*3  according to Honda research (as of February 2024)

Power Products and Other Businesses

In the Power products and other businesses, Honda is engaged in research and development activities based on the policy of “creating the lifestyles of the future, taking usefulness and joy to the next level.”

Among major technological achievements, in February 2024, we launched the all-new BF350 outboard motor, which delivers 350 horsepower, making it the most powerful model in the BF Series of 4-stroke outboard motors. These motors have been well received for their high dynamic performance and outstanding cost-effectiveness. Equipped with a newly developed dedicated V8 engine with displacement of 4,952 cm3, the BF350 is the flagship model of Honda marine outboards, providing powerful propulsion with maximum output of 350 horsepower. In addition to high performance and seaworthiness achieved by the abundant torque, the BF350 realizes a high level of quiet operation and low vibration through the adoption of a newly designed crankshaft. Moreover, the BF350 was developed with the goal to offer an environmentally-responsible and cost-effective outboard, realizing top-level*1 fuel economy in its class. In January 2024, the BF350 was awarded the Marine Power Innovation Awards 2023 by BOATING, a U.S. magazine, for outboard motors that have positively impacted the boat owner experience through great innovation.

As part of our initiatives to achieve zero environmental impact, a demonstration trial using a prototype 4kW electric propulsion for small watercraft began in Matsue City, Shimane Prefecture, Japan in August 2023. The electric propulsion prototype used in this demonstration trial was jointly developed by Honda and Tohatsu Corporation., with Honda responsible for the 4kW electric power unit and Tohatsu Corporation. for the frame, including the gear case and lower unit. The battery is the Honda Mobile Power Pack e:, a swappable, removable and portable battery used in Honda motorcycles. In January 2024, we also began a demonstration trial for the general public to board the watercraft.

As part of our initiatives for creating new value in outboard motors, we are working on developing for ship-wide systems. At the Miami International Boat Show 2024, held in Miami, the United States, in February 2024, we presented technological advancements in intelligence-based technologies, including 360-degree surround view cameras that cover blind spots, an autonomous docking system that allows the operator to select a berthing space and automatically move to and berth in it, and an autonomous trailering system that automatically maneuvers the ship to the tow trailer where it is to be unloaded and loads it onto the trailer rails.

Furthermore, other than outboard motors, we exhibited the Honda Autonomous Work Mower (Honda AWM), a prototype of Honda’s first battery-powered autonomous electric zero-turn riding mower, at Equip Exposition 2023 in Louisville, Kentucky, the United States in October 2023. The Honda AWM automatically mows the lawn along a pre-learned route using a teaching and playback mode. In early 2024, we successfully field tested a prototype with a top U.S. commercial landscape company, and we aim to further advance the Honda AWM as we continue to conduct demonstrations with other companies.

We will continue to accelerate initiatives aimed at creating new value.

In the aircraft business, Honda has created new value with uniquely developed leading-edge technologies. We have been building an operating base in order to grow our aircraft business from a long-term perspective.

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In October 2023, we revealed the HondaJet Echelon as the official name of its new light jet under development at 2023 National Business Aviation Convention and Exhibition (NBAA-BACE), the world’s largest business aircraft show, held in Las Vegas, Nevada, the United States. The HondaJet Echelon revolves around elevating travel efficiency in every aspect and offers the same level of flight experience as aircraft categories above the light jets. With further development in Honda’s proprietary technologies, such as the over-the-wing engine mount, natural laminar flow airfoil and nose, and the composite fuselage, the HondaJet Echelon can accommodate up to 11 passengers and crew in total.

In addition, we announced delivery of the 250th HondaJet in the fiscal year ended March 31, 2024 since it began customer deliveries in late 2015. The HondaJet holds type certifications in 14 countries and regions, has surpassed 210,000 hours of total flight time, and leads the industry with high reliability in Dispatch Reliability*2, an aircraft reliability index.

R&D expenditures in this segment during the fiscal years ended March 31, 2022, 2023 and 2024 were ¥29.9 billion, ¥27.5 billion and ¥26.4 billion, respectively.

*1  according to Honda research (as of January 2024)

*2  The percentage of departures within 15 minutes of the scheduled operation time. In the airline industry, it is used as an index of aircraft reliability.

Research for next-generation technologies

In research for next-generation technologies, we exhibited Honda CI-MEV, the demonstration model of a two-seat, four-wheel electric vehicle which features Honda CI (Cooperative Intelligence), Honda’s Original AI that enables mutual understanding between machines and people, and automated driving technologies to offer easily-accessible last-mile mobility for any users, in October 2023 at the JAPAN MOBILITY SHOW 2023. Honda is striving to augment the living radius for people, especially for those who are in situations that tend to limit mobility, such as when there is no public transportation or when people experience difficulty in walking a long distance.

In February 2024, as part of the technical demonstration test of the Honda CI Micro-mobility equipped with the Honda CI, we started an automated driving technology demonstration test for the general public in Joso City, Ibaraki Prefecture, Japan. By having the general public experience CI micro-mobility and providing feedback to us, we aim to evolve CI and improve its usability as a mobility, while fostering social acceptance with a view to commercialization around 2030.

Honda has been working on the development of CI-powered micro-mobility technologies with the aim to realize a society where each and every person can enjoy the joy and freedom of mobility. To this end, Honda is trying to make the mobility of people and things ubiquitous (whenever, wherever, to any destinations), collision-free and stress-free.

In October 2023, we demonstrated a field test by utilizing the Honda Autonomous Work Vehicle (Honda AWV), a platform-based autonomous mobility vehicle, at the Toronto Pearson Airport. The Honda AWV utilizes mapping and obstacle detection functions to autonomously travel routes uniquely set by the operator, and automatically decelerate and stop to avoid collisions with obstacles.

Furthermore, the world premiere of a teleoperated unmanned underwater vehicle ROV (Remotely Operated Vehicle) concept model, which can be utilized for underwater work such as maintenance of offshore wind power generation, was held in February 2024 at WIND EXPO Spring—13th Int’l Wind Energy Expo. The creation of clean energy is important to achieve carbon neutrality by 2050, and among these, offshore wind power generation is expected to grow significantly in the future. Aiming to contribute to the construction and maintenance of offshore wind power facilities, Honda is conducting research and development of a ROV that utilizes ASIMO and other technologies cultivated in robotics research.

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R&D expenditures incurred in research for next-generation technologies are distributed among Honda’s business segments.

Patents and Licenses

As of March 31, 2024, Honda owned more than 13,100 patents in Japan and more than 26,600 patents abroad. Honda also had applications pending for more than 4,800 patents in Japan and for more than 11,900 patents abroad. While Honda considers that, in the aggregate, Honda’s patents are important, it does not consider any one of such patents, or any related group of them, to be of such importance that the expiration or termination thereof would materially affect Honda’s business.

D. Trend Information

See Item 5.A “Operating Results” for information required by this item.

E. Critical Accounting Estimates

Not applicable.

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Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

Effective on June 23, 2021, Honda adopted a “company with three committees” corporate governance system (the “Three Committees system”) under the Company Law. Under the Three Committees system, Honda has no Board of Corporate Auditors and the function of corporate audit is implemented by the Audit Committee within the Board of Directors.

For Japanese companies which employ the Three Committees system, including Honda, the Company Law requires that such companies have a board of directors and one or more executive officers, and within the board of directors, a nominating committee (the “Nominating Committee”), an audit committee (the “Audit Committee”), and a compensation committee (the “Compensation Committee”) shall be established. Each of these three committees shall consist of three or more directors, a majority of which shall be outside directors. The members of each of the three committees as well as executive officers are elected by the resolution of the board of directors. In addition, Honda’s regulations of each of the three committees provide that the chairperson of each committee shall be elected from the Outside Directors who are members of the relevant committee by the resolution of the Board of Directors. For the Audit Committee, Honda’s regulations of the committee provide that full-time member of the Audit Committee shall be assigned by the resolution of the Board of Directors. The normal term of office of a director and an executive officer is one year. Directors and executive officers may serve any number of consecutive terms.

Honda’s Articles of Incorporation provide for the Board of Directors of not more than 15 Directors. Honda’s Board of Directors may appoint one Chairperson of the Board of Directors from among Directors. Also, Honda’s Board of Directors appoints one President and Executive Officer and may appoint several Executive Vice Presidents and Executive Officers, Senior Managing Executive Officers and Managing Executive Officers from among executive officers. The President and Executive Officer represents the Company. In addition, the Board of Directors may appoint, pursuant to its resolutions, Executive Officers who shall each represent the Company. Under the Company Law, a representative executive officer individually has authority to represent the company generally in the conduct of its affairs. The Board of Directors has an authority to determine the execution of business of the Company and to supervise the execution of duties of Directors and Executive Officers. Executive Officers are entitled to determine the execution of business of the Company which is entrusted by the Board of Directors and to execute business of the Company.

Under the Company Law, the Nominating Committee has the responsibility to determine the content of proposals regarding the election and dismissal of directors to be submitted to a general meeting of shareholders. The Audit Committee has the following responsibilities: (i) auditing the execution of duties by directors and executive officers and preparing audit reports and (ii) determining the content of proposals regarding the election and dismissal of accounting auditors and the refusal to reelect accounting auditors to be submitted to a general meeting of shareholders. The Compensation Committee has the responsibility to determine the content of the financial benefits as consideration for the execution of the duties, such as remuneration and bonuses, of directors and executive officers. As described above, not less than half of the members of each of the three committees must be outside directors. Each of the outside directors is required to meet all of the following independence requirements: the relevant person must be (1) a person who is not an executive director, executive officer, manager or any other employee of the company or any of its subsidiaries and has not been in such position for ten years prior to the assumption of office; (2) if the relevant person assumed an office of a non-executive director, accounting councilor or corporate auditor of the company or any of its subsidiaries during the ten years mentioned in (1) above, a person who had not been an executive director, executive officer, manager or any other employee of the company or any of its subsidiaries for further ten years prior to the assumption of such office; (3) a person who is not a director, corporate auditor, executive officer, manager or any other employee of the parent company or who is not a natural person controlling the company; (4) a person who is not an executive director, executive officer, manager or any other employee of a company which is controlled by the parent company or by the natural person controlling the company; and (5) a person who is not a spouse or one of a

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certain kinds of relatives of (a) a director, executive officer, manager or any other important employee of the company or (b) the natural person controlling the company. In addition, Honda has established additional independence requirements for the Outside Directors, the “Criteria for Independence of Outside Directors” as described in Exhibit 1.4 by the resolution of the Board of Directors, and all of Outside Directors meet the criteria. With respect to audit reports prepared by the audit committee, each member of the committee may note his or her opinion in the audit report if his or her opinion is different from the opinion expressed in the audit report. In addition, the Company is required to appoint independent certified public accountants or audit corporations as accounting auditors. Such accounting auditors have as their primary statutory duties to audit the consolidated and non-consolidated financial statements of the Company prepared in accordance with the Company Law to be submitted by a director to general meetings of shareholders and to prepare an accounting audit report thereon and to notify the contents of such report to the specified member of the audit committee (or, if such member is not specified, any member of the committee) and the specified director in charge.

The following table provides the names, date of birth, current positions held and brief biographies, term of office and number of shares owned of all the members of the Board of Directors and composition of the Three Committees. Also the names, date of birth, current positions held and brief biographies, term of office and number of shares owned of the Executive Officers (who are not concurrently the members of the Board of Directors) of the Company are provided below.

Members of the Board of Directors

Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Director and Representative Executive Officers
Toshihiro Mibe (July 1, 1961)	Joined Honda Motor Co., Ltd. in April 1987		*3		94,500
	Operating Officer, appointed in April 2014
	Executive in Charge of Powertrain Business for Automobile Operations, appointed in April 2014
	Head of Powertrain Production Supervisory Unit of Automobile Production for Automobile Operations, appointed in April 2014
	Executive in Charge of Powertrain Business and Drivetrain Business for Automobile Operations, appointed in April 2015
	Head of Drivetrain Business Unit in Automobile Production for Automobile Operations, appointed in April 2015
	Senior Managing Officer and Director of Honda R&D Co., Ltd., appointed in April 2016
	Managing Officer of the Company, appointed in April 2018
	Executive Vice President and Director of Honda R&D Co., Ltd., appointed in April 2018

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term	Number of Shares Owned
	President and Representative Director of Honda R&D Co., Ltd., appointed in April 2019
	In Charge of Intellectual Property and Standardization of the Company, appointed in April 2019
	Senior Managing Officer, appointed in April 2020
	In Charge of Mono-zukuri (Research & Development, Production, Purchasing, Quality, Parts, Service, Intellectual Property, Standardization and IT), appointed in April 2020
	Risk Management Officer, appointed in April 2020
	Senior Managing Director, appointed in June 2020
	Director in Charge of Mono-zukuri (Research & Development, Production, Purchasing, Quality, Parts, Service, Intellectual Property, Standardization and IT), appointed in June 2020
	President and Representative Director, appointed in April 2021
	Chief Executive Officer, appointed in April 2021 (presently held)
	Director, President and Representative Executive Officer, appointed in June 2021 (presently held)
	Nominating Committee Member, appointed in June 2021 (presently held)
	Chairman of the Board of Directors, appointed in April 2024 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Shinji Aoyama (December 25, 1963)	Joined Honda Motor Co., Ltd. in April 1986		*3		107,900
	Operating Officer, appointed in April 2012
	Chief Officer for Motorcycle Operations, appointed in April 2013
	Operating Officer and Director, appointed in June 2013
	Chief Officer for Regional Operations (Asia & Oceania), appointed in April 2017
	President and Director of Asian Honda Motor Co., Ltd., appointed in April 2017
	Operating Officer of the Company (resigned from position as Director), appointed in June 2017
	Managing Officer, appointed in April 2018
	Vice Chief Officer for Regional Operations (North America), appointed in April 2018
	Senior Executive Vice President, Chief Operating Officer and Director of Honda North America, Inc., appointed in April 2018
	Senior Executive Vice President, Chief Operating Officer and Director of American Honda Motor Co., Inc., appointed in April 2018
	President, Chief Operating Officer and Director of Honda North America, Inc., appointed in November 2018
	President, Chief Operating Officer and Director of American Honda Motor Co., Inc., appointed in November 2018
	Chief Officer for Regional Operations (North America) of the Company, appointed in April 2019
	President, Chief Executive Officer and Director of Honda North America, Inc., appointed in April 2019,
	President, Chief Executive Officer and Director of American Honda Motor Co., Inc., appointed in April 2019,
	Managing Officer in Charge of Electrification of the Company, appointed in July 2021
	Managing Executive Officer, appointed in October 2021

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term	Number of Shares Owned
	Senior Managing Executive Officer, appointed in April 2022
	Chief Officer for Business Development Operations, appointed in April 2022
	Corporate Brand Officer, appointed in April 2022
	Chief Officer for Automobile Operations, appointed in June 2022
	Director, Senior Managing Executive Officer, appointed in June 2022
	Director, Executive Vice President and Representative Executive Officer, appointed in April 2023 (presently held)
	Chief Operating Officer, appointed in April 2023
	Compensation Committee Member, appointed in April 2023
	Risk Management Officer, appointed in April 2023 (presently held)
	In Charge of Government and Industry Relations, appointed in April 2023

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Noriya Kaihara (August 4, 1961)	Joined Honda Motor Co., Ltd. in April 1984		*3		92,400
	General Manager of Automobile Quality Assurance Division, appointed in April 2012
	Operating Officer, appointed in April 2013
	Chief Quality Officer, appointed in April 2013
	Operating Officer and Director, appointed in June 2013
	Chief Officer for Customer Service Operations, appointed in April 2014
	Head of Service Supervisory Unit for Automobile Operations, appointed in April 2014
	Chief Officer for Customer First Operations, appointed in April 2016
	Operating Officer (resigned from position as Director), appointed in June 2017
	Managing Officer, appointed in April 2018
	Chief Officer for Purchasing Operations, appointed in April 2018
	Head of Business Supervisory Unit for Automobile Operations, appointed in April 2020
	Chief Officer for Customer First Operations, appointed in April 2021
	Risk Management Officer, appointed in April 2021
	Managing Executive Officer, appointed in June 2021
	Managing Officer, appointed in October 2021
	Chief Officer for Regional Operations (North America), appointed in October 2021
	President, Chief Executive Officer and Director of American Honda Motor Co., Inc., appointed in October 2021
	Senior Managing Executive Officer of the Company, appointed in April 2023
	Director, Senior Managing Executive Officer, appointed in June 2023
	Director, Executive Vice President and Representative Executive Officer, appointed in April 2024 (presently held)
	Compliance and Privacy Officer, appointed in April 2024 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Director, Managing Executive Officer
Eiji Fujimura (September 1, 1970)	Joined Honda Motor Co., Ltd. in April 1993		*3		9,000
	General Manager of Finance Division for Business Management Operations, appointed in April 2017
	General Manager of Regional Operation Planning Division for Regional Operations (North America), appointed in April 2019
	Operating Executive, appointed in April 2021
	Chief Officer for Business Management Operations, appointed in April 2021
	Head of Accounting and Finance Supervisory Unit, appointed in April 2022
	Executive Officer, appointed in April 2023
	Chief Financial Officer, appointed in April 2023 (presently held)
	Chief Officer for Corporate Management Operations, appointed in April 2023 (presently held)
	Managing Executive Officer, appointed in April 2024
	Director, Managing Executive Officer, appointed in June 2024 (presently held)
	Compensation Committee Member, appointed in June 2024 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Directors
Asako Suzuki (January 28, 1964)	Joined Honda Motor Co., Ltd. in April 1987		*3		78,800
	President of Dongfeng Honda Automobile Co., Ltd., appointed in April 2014
	Operating Officer of the Company, appointed in April 2016
	Vice Chief Officer for Regional Operations (Japan), appointed in April 2018
	Chief Officer for Human Resources and Corporate Governance Operations, appointed in April 2019
	Operating Executive, appointed in April 2020
	Director, appointed in June 2021 (presently held)
	Full-time Audit Committee Member, appointed in June 2021 (presently held)
Jiro Morisawa (February 24, 1967)	Joined Honda Motor Co., Ltd. in April 1989		*3		29,700
	General Manager of Regional Operation Planning Office for Regional Operations (Japan), appointed in April 2016
	General Manager of Accounting Division for Business Management Operations, appointed in April 2017
	Vice Chief Officer for Business Management Operations and General Manager of Accounting Division for Business Management Operations, appointed in April 2018
	Operating Officer, appointed in April 2019
	Chief Officer for Business Management Operations, appointed in April 2019
	Operating Executive, appointed in April 2020
	Chief Officer for Business Management Operations, appointed in April 2020
	President and Director of American Honda Finance Corporation, appointed in April 2021
	Director of the Company, appointed in June 2024 (presently held)
	Full-time Audit Committee Member, appointed in June 2024 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Kunihiko Sakai (March 4, 1954)	Public Prosecutor of Tokyo District Public Prosecutors’ Office, appointed in April 1979		*3		6,100
	Superintending Prosecutor of Takamatsu High Public Prosecutors’ Office, appointed in July 2014
	Superintending Prosecutor of Hiroshima High Public Prosecutors’ Office, appointed in September 2016 (resigned in March 2017)
	Registered with the Dai-Ichi Tokyo Bar Association in April 2017
	Advisor Attorney to TMI Associates, appointed in April 2017 (presently held)
	Audit and Supervisory Board Member (Outside) of Furukawa Electric Co., Ltd., appointed in June 2018 (presently held)
	Director (Audit and Supervisory Committee Member) of the Company, appointed in June 2019
	Director, appointed in June 2021 (presently held)
	Nominating Committee Member, appointed in June 2021 (presently held)
	Audit Committee Member, appointed in June 2021 (presently held)
Fumiya Kokubu (October 6, 1952)	Joined Marubeni Corporation in April 1975		*3		4,500
	President and CEO, Member of the Board of Marubeni Corporation, appointed in April 2013
	Chairman of the Board of Marubeni Corporation, appointed in April 2019 (presently held)
	Outside Director of Taisei Corporation, appointed in June 2019 (presently held)
	Director of the Company, appointed in June 2020 (presently held)
	Nominating Committee Member (Chairperson), appointed in June 2021 (presently held)
	Compensation Committee Member, appointed in June 2021 (presently held)
	Chairman of Japan Machinery Center for Trade and Investment, appointed in May 2022 (presently held)
	Chairman of Japan Foreign Trade Council, Inc., appointed in May 2022 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Yoichiro Ogawa (February 19, 1956)	Joined Tohmatsu & Aoki Audit Corporation (currently Deloitte Touche Tohmatsu LLC) in October 1980		*3		3,100
	Registered as Japanese Certified Public Accountant in March 1984
	Deputy CEO of Deloitte Touche Tohmatsu LLC, appointed in October 2013
	Deputy CEO of Tohmatsu Group (currently Deloitte Tohmatsu Group), appointed in October 2013
	Global Managing Director for Asia Pacific of Deloitte Touche Tohmatsu Limited (United Kingdom), appointed in June 2015 (resigned in May 2018)
	CEO of Deloitte Tohmatsu Group, appointed in July 2015
	Senior Advisor of Deloitte Tohmatsu Group, appointed in June 2018 (resigned in October 2018)
	Founder of Yoichiro Ogawa CPA Office in November 2018 (presently held)
	Outside Audit & Supervisory Board Member of Recruit Holdings Co., Ltd., appointed in June 2020 (presently held)
	Director of the Company, appointed in June 2021 (presently held)
	Audit Committee Member (Chairperson), appointed in June 2021 (presently held)
	Compensation Committee Member, appointed in June 2021 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Kazuhiro Higashi (April 25, 1957)	Joined Resona Group in April 1982		*3		3,100
	Director, President and Representative Executive Officer of Resona Holdings, Inc., appointed in April 2013
	Representative Director, President and Executive Officer of Resona Bank, Limited, appointed in April 2013
	Chairman of Osaka Bankers Association, appointed in June 2013 (resigned in June 2014)
	Chairman of the Board, President, and Representative Director of Resona Bank, Limited, appointed in April 2017
	Chairman of Osaka Bankers Association, appointed in June 2017 (resigned in June 2018)
	Chairman of the Board, President, Representative Director and Executive Officer of Resona Bank, Limited, appointed in April 2018
	Chairman and Director of Resona Holdings, Inc., appointed in April 2020 (resigned in June 2022)
	Chairman and Director of Resona Bank, Limited, appointed in April 2020 (resigned in June 2022)
	Outside Director of Sompo Holdings, Inc., appointed in June 2020 (presently held)
	Director of the Company, appointed in June 2021 (presently held)
	Nominating Committee Member, appointed in June 2021 (presently held)
	Compensation Committee Member (Chairperson), appointed in June 2021 (presently held)
	Senior Advisor of Resona Holdings, Inc., appointed in June 2022 (presently held)
	Senior Advisor of Resona Bank, Limited., appointed in June 2022 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Ryoko Nagata (July 14, 1963)	Joined Japan Tobacco Inc. in April 1987		*3		3,100
	Executive Officer of Japan Tobacco Inc., appointed in June 2008
	Standing Audit & Supervisory Board Member of Japan Tobacco Inc., appointed in March 2018 (resigned in March 2023)
	Director of the Company, appointed in June 2021 (presently held)
	Audit Committee Member, appointed in June 2021 (presently held)
	External Corporate Auditor of Medley, Inc., appointed in March 2023 (presently held)
	Outside Director of UACJ Corporation, appointed in June 2023 (presently held)
Mika Agatsuma (June 8, 1964)	Joined IBM Japan, Ltd. in April 1987		*3		—
	Vice President of IBM Japan, Ltd., appointed in August 2017
	In charge of Cloud Application Innovation for Global Business Services of IBM Japan, Ltd., appointed in August 2017
	Managing Partner of IBM Japan, Ltd., appointed in October 2022 (resigned in March 2024)
	In charge of Hybrid Cloud Services for IBM Consulting of IBM Japan, Ltd., appointed in October 2022
	In charge of Hybrid Cloud Platform for IBM Consulting of IBM Japan, Ltd., appointed in June 2023
	Director of the Company, appointed in June 2024 (presently held)
	Nominating Committee Member, appointed in June 2024 (presently held)

*1 Effective on June 23, 2021, Honda adopted the Three Committees system under the Company Law.

*2 Directors Mr. Kunihiko Sakai, Mr. Fumiya Kokubu, Mr. Yoichiro Ogawa, Mr. Kazuhiro Higashi, Ms. Ryoko Nagata and Ms. Mika Agatsuma are Outside Directors.

*3 The term of office of a Director is until at the close of the ordinary general meeting of shareholders of the fiscal year ending March 31, 2025 after his/her election to office at the close of the ordinary general meeting of shareholders on June 19, 2024.

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Composition of the Three Committees under the Board of Directors

·: Chairperson ○: Member

Director’s Name	Nominating Committee	Audit Committee	Compensation Committee
Toshihiro Mibe	○
Eiji Fujimura			○
Asako Suzuki		○
Jiro Morisawa		○
Kunihiko Sakai	○	○
Fumiya Kokubu	·		○
Yoichiro Ogawa		·	○
Kazuhiro Higashi	○		·
Ryoko Nagata		○
Mika Agatsuma	○

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Executive Officers (who are not concurrently the members of the Board of Directors)

Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Senior Managing Executive Officer
Katsushi Inoue (October 22, 1963)	Joined Honda Motor Co., Ltd. in April 1986		*4		58,400
	President and Chief Executive Officer of Honda Cars India Ltd., appointed in April 2015
	Operating Officer of the Company, appointed in April 2016
	Chief Officer for Regional Operations (Europe), appointed in April 2016
	President and Director of Honda Motor Europe Ltd., appointed in April 2016
	Managing Officer of the Company, appointed in April 2020
	Chief Officer for Regional Operations (China), appointed in April 2020
	President of Honda Motor (China) Investment Co., Ltd., appointed in April 2020
	President of Honda Motor (China) Technology Co., Ltd., appointed in April 2020
	Senior Managing Executive Officer of the Company, appointed in April 2023 (presently held)
	Chief Officer for Electrification Business Development Operations, appointed in April 2023 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Managing Executive Officers
Keiji Ohtsu (July 7, 1964)	Joined Honda R&D Co., Ltd. in April 1983		*4		61,400
	Managing Officer of Honda R&D Co., Ltd., appointed in April 2014
	Operating Officer of the Company, appointed in April 2018
	Chief Quality Officer, appointed in April 2018
	Operating Executive, appointed in April 2020
	Chief Officer for Quality Innovation Operations, appointed in April 2020
	In Charge of Certification & Regulation Compliance Division, appointed in April 2020
	In Charge of Quality & Compliance Audit Division, appointed in April 2020
	Managing Officer, appointed in April 2021
	President and Representative Director of Honda R&D Co., Ltd., appointed in April 2021 (presently held)
	Managing Executive Officer of the Company, appointed in June 2021 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Masayuki Igarashi	Joined Honda Motor Co., Ltd. in April 1988		*4		87,800
(July 6, 1963)	Director of Asian Honda Motor Co., Ltd., appointed in April 2014
	Operating Officer of the Company, appointed in April 2015
	Chief Operating Officer for Power Product Operations, appointed in April 2015
	Operating Officer and Director, appointed in June 2015
	Executive Vice President and Director of Honda North America, Inc., appointed in April 2017
	Executive Vice President and Director of American Honda Motor Co., Inc., appointed in April 2017
	Operating Officer of the Company, appointed in June 2017
	Chief Officer for Regional Operations (Asia & Oceania), appointed in April 2018
	President and Chief Executive Officer of Asian Honda Motor Co., Ltd., appointed in April 2018
	Operating Executive of the Company, appointed in April 2020
	Managing Officer, appointed in April 2022
	Managing Executive Officer, appointed in April 2023 (presently held)
	Chief Officer for Regional Operations (China), appointed in April 2023 (presently held)
	President of Honda Motor (China) Investment Co., Ltd., appointed in April 2023 (presently held)
	President of Honda Motor (China) Technology Co., Ltd., appointed in April 2023 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Kensuke Oe	Joined Honda Motor Co., Ltd. in April 1990		*4		9,000
(May 11, 1967)	In charge of Manufacturing of Honda Canada Inc., appointed in April 2018
	Operating Executive of the Company, appointed in April 2020
	General Manager of Saitama Factory in Production Supervisory Unit for Automobile Operations, appointed in April 2020
	Head of Production Engineering Supervisory Unit in Mono-zukuri Center for Automobile Operations, appointed in April 2021
	Managing Officer, appointed in April 2022
	Head of Production Unit for Automobile Operations, appointed in April 2022
	Managing Executive Officer, appointed in April 2023 (presently held)
	President and Director, Honda Development & Manufacturing of America, LLC, appointed in April 2024 (presently held)
Manabu Ozawa	Joined Honda Motor Co., Ltd. in April 1989		*4		9,000
(May 12, 1965)	Managing Director of Honda R&D Co., Ltd., appointed in April 2019
	Operating Executive of the Company, appointed in April 2020
	Head of Corporate Planning Supervisory Unit, appointed in April 2020
	Director for Honda Innovation Inc., appointed in April 2020
	Managing Executive Officer of the Company, appointed in April 2023 (presently held)
	Chief Officer for Corporate Strategy Operations, appointed in April 2023 (presently held)
	Chief Officer for Traffic Safety Promotion Operations, appointed in April 2024 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Hironao Ito	Joined Honda Motor Co., Ltd. in April 1989		*4		9,600
(December 27, 1966)	Managing Director of Honda R&D Co., Ltd., appointed in April 2019
	Operating Executive of the Company, appointed in April 2020
	Head of Digital Transformation Supervisory Unit, appointed in April 2020
	Head of IT Operations, appointed in April 2021
	Head of Digital Supervisory Unit, appointed in April 2022
	Deputy General Manager of Mono-zukuri Center for Automobile Operations, appointed in April 2022
	Vice Chief Officer for Automobile Operations, appointed in June 2022
	Managing Executive Officer, appointed in April 2023 (presently held)
	Head of BEV Development Center for Electrification Business Development Operations, appointed in April 2023
	Head of Automobile Development Center for Automobile Operations, appointed in April 2023
	Director of Honda R&D Co., Ltd., appointed in April 2023 (presently held)
	Chief Development Officer of the Company, appointed in April 2024 (presently held)

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Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Executive Officers
Ayumu Matsuo (September 28, 1965)	Joined Honda Motor Co., Ltd. in April 1991		*4		7,800
	Managing Director of Honda R&D Co., Ltd., appointed in April 2020
	Operating Executive of the Company, appointed in April 2021
	Chief Officer, Quality Innovation Operations, appointed in April 2021
	Executive in Charge of Certification & Regulation Compliance Division, appointed in April 2021
	Executive in Charge of Quality & Compliance Audit Division, appointed in April 2021
	Head of Quality Innovation Unit, appointed in April 2022
	Executive in Charge of Certification & Regulation Compliance Division, appointed in April 2022
	Executive in Charge of Quality & Compliance Audit Division, appointed in April 2022
	Head of Supply Chain & Purchasing Unit, Automobile Operations, appointed in April 2023
	Executive Officer, appointed in April 2024 (presently held)
	Chief Officer for Supply Chain & Purchasing Operations, appointed in April 2024 (presently held)
Minoru Kato	Joined Honda Motor Co., Ltd. in April 1988		*4		—
(December 17, 1965)	President of Honda Motorcycle and Scooter India Pvt. Ltd., appointed in April 2017
	Operating Executive of the Company, appointed in April 2020
	Chief Officer for Life Creation Operations, appointed in May 2020
	Head of Power Products Business Supervisory Unit, Motorcycle and Power Products Operations, appointed in April 2022
	Head of Motorcycle Business Unit, Motorcycle and Power Products Operations, appointed in April 2023 (presently held)
	Executive Officer, appointed in April 2024 (presently held)
	Chief Officer for Motorcycle and Power Products Operations, appointed in April 2024 (presently held)

102

Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Yutaka Tamagawa	Joined Honda Motor Co., Ltd. in April 1990		*4		—
(April 23, 1966)	Operating Officer of Honda R&D Co., Ltd., appointed in April 2018
	Operating Executive of the Company, appointed in April 2020
	Electronic Control Development Supervisory Unit of Mono-zukuri Center for Automobile Operations, appointed in April 2020
	Head of Software Defined Mobility Development Supervisory Unit for Business Development Operations, appointed in April 2022
	Head of Quality Innovation Unit, appointed in April 2023
	Executive in Charge of Certification & Regulation Compliance Division, appointed in April 2023
	Executive in Charge of Quality & Compliance Audit Division, appointed in April 2023
	Executive Officer, appointed in April 2024 (presently held)
	Chief Officer for Quality Innovation Operations, appointed in April 2024 (presently held)
Kazuhiro Takizawa	Joined Honda Motor Co., Ltd. in April 1990		*4		—
(March 29, 1968)	General Manager of Europe Automobile Division for Regional Operations (Europe, Africa and the Middle East), appointed in April 2022
	Operating Executive, appointed in April 2023
	Vice Chief Officer for Regional Operations (North America), appointed in April 2023
	EVP of American Honda Motor Co., Inc., appointed in April 2023
	Executive Officer of the Company, appointed in April 2024 (presently held)
	Chief Officer for Regional Operations (North America), appointed in April 2024 (presently held)
	President, Chief Executive Officer and Director of American Honda Motor Co., Inc., appointed in April 2024 (presently held)

103

Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Katsuto Hayashi (October 20, 1969)	Joined Honda Motor Co., Ltd. in April 1992		*4		—
	General Manager of Business Strategy Division for Business Supervisory Unit for Automobile Operations, appointed in October 2021
	Operating Executive, appointed in April 2022
	Head of Automobile Business Strategy Unit for Electrification Business Development Operations, appointed in April 2023
	Executive Officer, appointed in April 2024 (presently held)
	Chief Officer for Automobile Operations, appointed in April 2024 (presently held)
	Chief Officer for Regional Operations (Associated Regions), appointed in April 2024 (presently held)
Takashi Onuma (September 11, 1973)	Joined Honda Motor Co., Ltd. in July 2000		*4		—
	Senior Vice President, Honda Development & Manufacturing of America, LLC, appointed in April 2021
	Operating Executive of the Company, appointed in April 2022
	EVP of Honda Development & Manufacturing of America, LLC, appointed in April 2022
	Deputy Head of Automobile Development Center for Automobile Operations of the Company, appointed in April 2023
	Head of Production Engineering Unit, appointed in April 2023
	Head of ICE Automobile Development Unit, appointed in April 2023
	Executive Officer, appointed in April 2024 (presently held)
	Chief Officer for Automobile Production Operations, appointed in April 2024 (presently held)

*4 The term of office of an Executive Officer is until at the close of the first Board of Directors meeting held after the ordinary general meeting of shareholders of the fiscal year ending March 31, 2025 after his/her appointment to office.

*5 The Company introduced the Operating Executive position effective April 1, 2020, with the aim of advancing its corporate executive structure and enabling the Company to address changes in the business environment with greater speed and flexibility. Operating Executives will engage in company operations, with responsibility for business execution in their respective areas under the direction and supervision of management. Operating Executives are not statutory positions under the Company Law and do not conform to the definition of “Directors and Senior Management” as defined in Form 20-F.

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There is no family relationship between any Director or Executive Officer and any other Director or Executive Officer.

None of Honda’s members of the Board of Directors or Executive Officers is party to a service contract with Honda or any of its subsidiaries that provides for benefits upon termination of employment.

B. Compensation

Methods of determining the policy for determining individual remuneration of Directors and Executive Officers

The Company views remuneration for Directors and Executive Officers, the key to its corporate governance, as an important driving force in realizing our fundamental beliefs, management policies, and aspirations. The Compensation Committee has established the following decision-making policy in order to encourage appropriate risk-taking and accurately reflect management responsibility in an effort to promote speedy reforms to achieve our vision amidst a drastically changing environment.

1. The Company’s remuneration structure for Directors and Executive Officers is designed to motivate officers to contribute to the improvement of the Company’s business performance not only over the short-term, but also over the mid- to long-term, so that the Company can continuously enhance its corporate value, and it consists of monthly remuneration, a fixed amount paid each month as remuneration for the execution of duties, STI (Short Term Incentive) based on business performance for the relevant fiscal year, and LTI (Long Term Incentive) based on the mid- to long-term business performance.

2. Monthly remuneration shall be paid as a fixed amount each month based on remuneration standards resolved by the Compensation Committee.

3. STI shall be determined and paid by resolution of the Compensation Committee, taking into consideration the business performance of each fiscal year.

4. Based on standards and procedures approved by the Compensation Committee, LTI is based on the mid- to long-term performance and paid in the form of the Company’s shares and cash, in order to function as a sound incentive for sustainable growth.

5. Remuneration paid to Directors who concurrently serve as Executive Officers and Executive Officers shall consist of monthly remuneration, STI and LTI, and the composition rate shall be determined based on the remuneration standards resolved by the Compensation Committee. The composition ratio of variable compensation is increased according to the weight of management responsibility attributed to each position.

6. Remuneration paid to Outside Directors and other Directors who do not concurrently serve as Executive Officers shall consist only of monthly remuneration.

7. In order to advance the Company’s sustainable growth and enhance its corporate value over the mid-to long-term by achieving the management from the perspective of shareholders through having a shareholding in the Company, even Directors and Executive Officers who are not eligible for LTI shall acquire the Company’s stock by contributing a certain portion of their remuneration to the Officers Shareholding Association.

8. Directors and Executive Officers shall continuously hold, throughout their term of office and for one year after their retirement, any stock of the Company acquired as LTI or acquired through the Officers Shareholding Association.

Approach to remuneration level

The remuneration levels for Directors and Executive Officers are set at a level that is highly competitive in order to secure diverse and talented human resources based on objective remuneration data from an outside research organization and information provided by outside consultants, as well as research and analysis of a peer group of approximately 20 to 30 global Japanese companies of similar size. The Company also reviews remuneration from time to time in response to changes in the business environment.

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Remuneration structure

Remuneration paid to Executive Officers consists of monthly remuneration, STI and LTI, and the ratio of STI and LTI is set according to the weight of management responsibility attributed to each position, with a view to providing an incentive to continuously improve corporate value.

1. Outline of remuneration system for Executive Officers

Type of remuneration	Based on performance	Fluctuation	Payment method	Payment timing	Remuneration composition ratio (When STI/LTI are paid at the base amount)
					President and Executive Officer	Executive Vice President and Executive Officer	Senior Managing Executive Officer	Managing Executive Officer	Executive Officer
Monthly remuneration	Fixed	—	Cash	Monthly	25%	35%	40%	50%
STI	Short-term performance-based remuneration	0 to 180%	Cash	Annually	25%	30%	30%	25%
LTI	Medium- to long-term performance-based remuneration	50 to 150%	Stock	Three years after the annual stock points are granted with restriction on transfer until retirement	50%	35%	30%	25%

2. Monthly remuneration

Monthly remuneration is paid each month as a fixed monthly amount in cash based on positions as consideration for the execution of duties.

3. STI

STI is a performance-based remuneration that is paid once a year in cash, taking into account the Company’s performance each fiscal year and the individual performance of each Executive Officer.

The final payment amount is determined by multiplying the standard STI amount by the individual performance coefficient after determining the payment level using the Company’s performance coefficient.

The Company’s performance coefficient fluctuates between 0 and 150% depending on the achievement of key performance indicators (KPIs), which are operating profit margin and profit attributable to owners of the parent of consolidated accounting, both of which are important indicators that measure the contribution to corporate value during each fiscal year.

The individual performance coefficient fluctuates between 80 and 120% depending on the achievement of individual targets set for each Executive Officer’s role. The President’s performance is evaluated by the Compensation Committee, while those of the Executive Officers, excluding the President, are evaluated by the Compensation Committee following an evaluation by the President.

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Company’s performance coefficient (Fluctuation range: 0-150%)

KPIs (Consolidated accounting)	Evaluation method	Weight of each KPI
Operating profit margin	Degree of achievement of targets	50%
Profit attributable to owners of the parent		50%

Individual performance coefficient (Fluctuation range: 80-120%)

KPIs	Evaluation method	Weight of each KPI
Individual targets set according to role	Degree of achievement of individual targets	100%

STI payment   = Standard STI   x Company’s performance coefficient   x Individual performance
coefficient  

4. LTI

LTI is a non-monetary performance-based remuneration that provides shares based on financial and non-financial performance through a trust structure, aiming to further enhance mindfulness toward contributing to the sustained improvement of corporate value of the Company over the mid- to long-term, as well as to share profits with shareholders.

Points are granted according to the base amount for each position in April each year, and shares equivalent to the points based on performance are granted three years after the points are awarded. Furthermore, a restriction period on transfer is placed on the granted shares. In principle, such restriction on transfer is lifted at the time of retirement from both of the Company’s Director and Executive Officer. Any share of the Company acquired as LTI shall be continuously held, throughout their term of office and for one year after their retirements.

Performance evaluations are based on key indicators that measure the degree of contribution to increasing corporate value over the mid- to long-term. KPIs for financial indicators are consolidated operating profit margin and consolidated profit before income taxes, which vary from 50 to 150% depending on the level of growth over the past three fiscal years. KPIs for non-financial indicators are brand value, SRI indicators, and Associate Engagement, which vary from 50 to 150% depending on the degree of achievement of the target values for the year under evaluation.

Points shall be forfeited and shares during the restriction period on transfer are acquired by the Company for no consideration in the event of certain misconduct or violations of laws, regulations, or company rules.

KPIs		Evaluation method	Weight	Fluctuation
Financial indicators	Consolidated operating profit margin	Evaluated based on growth over the past three fiscal years	35%	50 to 150%
	Consolidated profit before income taxes		35%
Non-financial indicators	Brand value	Evaluated based on degree of achievement of targets	30%
	SRI index
	Associate Engagement

* Non-financial indicators are evaluated based on the following indicators:

- Brand value: Survey of motorcycle/automobile/power products businesses by a third-party research firm

- SRI index: Dow Jones Sustainability World Index

- Associate Engagement: Survey of employee activeness in each region by a third-party research firm

107

(LTI from the fiscal year beginning from April 1, 2024)

In the fiscal year ended March 31, 2024, the Company reorganized key themes, priority, and their associated goals that would be especially focused on in the future in order to create the “joy and freedom of mobility”. We have selected the new Key Themes by systematically identifying and prioritizing societal issues extracted comprehensively from the perspective of sustainability, aligning them with Honda’s strategic direction. Specifically, in addition to “environment” and “safety” which have long been highlighted as important themes in our management, we have chosen “human” and “technology,” which drive Honda’s growth, as well as “brand” that encompasses all corporate activities as our five non-financial indicators as important themes. We align these aspects with our financial strategy to effectively generate both social and economic values. Furthermore, within the realm of non-financial indicators, we have defined the materiality that should be addressed for each theme. This approach helps us clarify the areas we need to focus on to achieve our vision.

In line with stakeholders’ interests, including those of shareholders’, we have decided to revise certain performance evaluation methods in this scheme to accelerate initiatives related to important themes and further support the creation of both social and economic values. Specifically, we will evaluate key financial indicators (such as consolidated operating profit margin and profit for the year attributable to owners of the parent that should be addressed to achieve the ROIC target set for the fiscal year ending March 31, 2031), as well as non-financial indicators directly related to the Five Key Themes, and market valuation reflecting the creation of social and economic value (relative Total Shareholder Return) on an annual basis.

KPIs		Evaluation method	Weight	Fluctuation
Financial indicators	Consolidated operating profit margin	Evaluated based on degree of achievement of targets	60%	40 to 240%
	Profit for the year attributable to owners of the parent
Non-financial indicators	Brand value		20%
	Total CO2 emissions
	Associate engagement
Stock indicator	Total Shareholder Return	Evaluation based on relative comparison with the dividend-inclusive TOPIX growth rate for the fiscal year	20%

* Non-financial indicators are evaluated based on the following indicators:

- Brand value: Survey of the Company’s brand value by a third-party research firm

- Total CO2 emissions: The amount of CO2 emissions from corporate activities and products based on CO2 emissions calculation methods used commonly in Japan (and globally)

- Associate Engagement: Survey of employee activeness in each region by a third-party research firm

In addition, Executive Officers who are nonresidents of Japan are not eligible for LTI, but shall be eligible for the same addition to or subtraction from the remuneration based on the performance evaluation used in LTI.

As a result of the evaluation in the fiscal year ended March 31, 2024, STI was increased by 30% compared to the base amount, and LTI was paid with a performance-based coefficient of 134%.

Recovery of Erroneously Awarded Compensation

In accordance with the rules of the United Sates Securities and Exchange Commission and the New York Stock Exchange, the Company has implemented a policy to recover erroneously awarded incentive-based compensation.

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Under this policy, in the event that the Company is required to prepare a restatement of the financial statements, the Company shall, in principle, reasonably and promptly cause the return of all of the portion of the STI and LTI paid or granted to the Company’s Executive Officers exceeding what would have been paid or granted based on the restated financial statements. In addition, in the event that an Executive Officer of the Company commits certain misconduct, derelictions of duty, violations of the laws, or similar actions, the Company shall reasonably and promptly, as determined by the Compensation Committee, cause the return of part or all of the STI and LTI paid or granted to such Executive Officer.

The compensation subject to recovery includes STI and LTI paid or granted during the fiscal year in which a restatement of the financial statements is required or other causes for recovery arose, and the preceding three fiscal years. The Company’s policy to recover extends to Executive Officers who served as such during such period, even if they have since resigned from the position. Furthermore, LTI subject to recovery includes points awarded before the issuance of shares and shares during the transfer restriction period.

Matters related to non-monetary remuneration

In order to function as a sound incentive for sustainable growth, in accordance with the criteria and procedures approved by the Compensation Committee, the Company delivers and provides the Company’s shares and dividends accruing on the Company’s shares, in conjunction with the mid- to long-term business performance.

Overview of the Compensation Committee and its activities

The Compensation Committee determines the details of remuneration, for each individual Director and Executive Officer and undertakes other duties as required by laws and regulations and the Articles of Incorporation. The Compensation Committee consists of four Directors, including three Outside Directors, and the Chairperson is selected from among the independent Outside Directors.

The Compensation Committee met eleven times in the fiscal year ended March 31, 2024, with all members present at each meeting.

The main matters discussed during the fiscal year ended March 31, 2024 are as follows.

- Basic policies and annual activity plans

- Compensation evaluation for Directors and Executive Officers

- LTI and share delivery rules

- Policy to recover erroneously awarded compensation

Reasons for the Compensation Committee to determine that the details of individual remuneration for Directors and Executive Officers are in line with the determination policy

The Company examines and deliberates the consistency of remuneration levels, the composition of remuneration, and the setting of targets for performance-based remuneration, etc., with the Company’s basic policy on the determination of remuneration for officers from various perspectives, based on comparisons with the external environment and information provided by external consultants.

Therefore, the Compensation Committee believes that the individual remuneration for Directors and Executive Officers for the fiscal year ended March 31, 2024 is in line with the determination policy.

The total amount of fixed monthly remuneration paid to the Company’s Directors and Executive Officers during the fiscal year ended March 31, 2024 was ¥1,209 million. This amount includes fixed monthly remuneration paid to one Director who retired during the fiscal year. The amount of fixed monthly remuneration paid to Executive Officers includes the amount of fixed monthly remuneration paid to the Executive Officers who were also Directors of subsidiaries of the Company.

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The total amount of STI and LTI for the Company’s Directors and Executive Officers accrued for the fiscal year ended March 31, 2024 were ¥612 million and ¥453 million, respectively.

The amounts of fixed monthly remuneration paid, STI and LTI accrued during the fiscal year ended March 31, 2024 are as follows:

	Fixed remuneration				Performance-based remuneration								Total
	Remuneration				STI				LTI
	Number of persons		Yen (millions)		Number of persons		Yen (millions)		Number of persons		Yen (millions)		Yen (millions)
Directors excluding Outside Directors		4	¥	287		—	¥	—		1	¥	12	¥	300
Outside Directors		5		90		—		—		—		—		90
Executive Officers		13		829		13		612		10		440		1,882
Total		22	¥	1,209		13	¥	612		11	¥	453	¥	2,274

* Directors excluding Outside Directors do not include three directors who concurrently serve as Executive Officers.

The amount of fixed monthly remuneration paid to Seiji Kuraishi during the fiscal year ended March 31, 2024 was ¥135 million.

The amount of fixed monthly remuneration paid to Toshihiro Mibe during the fiscal year ended March 31, 2024 was ¥94 million. The amount of STI and LTI for Toshihiro Mibe accrued for the fiscal year ended March 31, 2024 were ¥146 million and ¥196 million, respectively.

The amount of fixed monthly remuneration paid to Shinji Aoyama during the fiscal year ended March 31, 2024 was ¥80 million. The amount of STI and LTI for Shinji Aoyama accrued for the fiscal year ended March 31, 2024 were ¥97 million and ¥70 million, respectively.

The amount of fixed monthly remuneration paid to Noriya Kaihara during the fiscal year ended March 31, 2024 was ¥132 million. The amount of STI for Noriya Kaihara accrued for the fiscal year ended March 31, 2024 was ¥56 million.

The amount of fixed monthly remuneration paid to Katsushi Inoue during the fiscal year ended March 31, 2024 was ¥44 million. The amount of STI and LTI for Katsushi Inoue accrued for the fiscal year ended March 31, 2024 were ¥54 million and ¥34 million, respectively.

The amount of fixed monthly remuneration paid to Masayuki Igarashi during the fiscal year ended March 31, 2024 was ¥91 million. The amount of STI for Masayuki Igarashi accrued for the fiscal year ended March 31, 2024 was ¥36 million.

The amount of fixed monthly remuneration paid to Mitsugu Matsukawa during the fiscal year ended March 31, 2024 was ¥112 million. The amount of STI for Mitsugu Matsukawa accrued for the fiscal year ended March 31, 2024 was ¥36 million.

The Board Incentive Plan

In the fiscal year ended March 31, 2019, the Company resolved to introduce a stock compensation scheme (the “Scheme”) for the purpose of further enhancing Executive Officers’ mindfulness toward contributing to the sustained improvement of corporate value of the Company over the mid- to long-term as well as seeking for the sharing of common interests with its shareholders. The continuation of the content of the Scheme was resolved in the fiscal year ended March 31, 2022 and in the fiscal year ending March 31, 2025.

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Executive Officers and a part of Operating Executives of the Company who are residents of Japan (collectively, “Executive Officers Etc.”) are eligible for the Scheme.

Outline of the Scheme

The Scheme is a stock compensation scheme that uses a BIP (Board Incentive Plan) trust (a “BIP Trust”). A BIP Trust is a scheme where, in the same way as performance share and restricted stock schemes in the U.S., shares in the Company and money are delivered and paid to Executive Officers Etc. in accordance with their positions and the degree of achievement or growth in management indicators of the Company such as performance and corporate value.

Content of trust agreement

Type of trust An individually-operated specified trust of money other than cash trust (third party beneficiary trust)

Purpose of trust To further enhance mindfulness of Executive Officers Etc. toward contributing to the sustained improvement of corporate value of the Company over the mid- to long-term

Trustor The Company

Trustee Mitsubishi UFJ Trust and Banking Corporation

(Joint trustee: The Master Trust Bank of Japan, Ltd.)

Beneficiaries Executive Officers Etc. who satisfy the beneficiary requirements

Trust administrator A third party which has no interests in the Company (a certified public accountant)

Date of trust agreement August 20, 2018 (scheduled to be changed by August 31, 2024)

Period of trust From August 20, 2018 to August 31, 2024 (scheduled to be extended until August 31, 2027 based on the changes to be made to the trust agreement by August 31, 2024)

Exercise of voting rights of Company shares None

Class of shares acquired Common shares of the Company

Amount of trust money added at the time of the trust period extension 1,940 million yen (scheduled) (including trust fees and trust expenses)

Timing of acquisition of shares By August 31, 2024 (scheduled)

Method of acquisition of shares Acquisition from stock market

Holder of vested rights The Company

Residual assets The residual assets that the Company can obtain as a holder of vested rights shall be included in the trust expenses reserve

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Total number of shares scheduled to be acquired by Executive Officers Etc.

2,603,000 shares (Total number of shares scheduled to be acquired for three fiscal years from 2024)

Scope of persons eligible to receive beneficiary rights and other rights under the Scheme

Executive Officers Etc. who satisfy the beneficiary requirements

C. Board Practices

See Item 6.A “Directors and Senior Management” for information concerning the Company’s Directors required by this item.

D. Employees

The following tables list the number of Honda full-time employees as of March 31, 2022, 2023 and 2024.

As of March 31, 2022

Total	Motorcycle Business	Automobile Business	Financial Services Business	Power Products and Other Businesses
204,035	46,448	146,092	2,321	9,174

As of March 31, 2022, Honda had 204,035 full-time employees, including 138,796 local nationals employed in its overseas operations.

As of March 31, 2023

Total	Motorcycle Business	Automobile Business	Financial Services Business	Power Products and Other Businesses
197,039	45,813	139,999	2,340	8,887

As of March 31, 2023, Honda had 197,039 full-time employees, including 134,193 local nationals employed in its overseas operations.

As of March 31, 2024

Total	Motorcycle Business	Automobile Business	Financial Services Business	Power Products and Other Businesses
194,993	47,980	135,829	2,409	8,775

As of March 31, 2024, Honda had 194,993 full-time employees, including 133,573 local nationals employed in its overseas operations.

Most of the Company’s regular employees in Japan, except management personnel, are required by the terms of the Company’s collective bargaining agreement with its labor union to become members of the Federation of All Honda Workers’ Union (AHWU), which is affiliated with the Japan Council of the International Metalworkers’ Federation. Approximately 86% of the employees of the Company and its Japanese subsidiaries were members of AHWU as of March 31, 2024.

The Company has had labor contracts with its labor union in Japan since 1970. These contracts are renegotiated with respect to basic wages and other working conditions. The regular employees of the Company’s

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Japanese subsidiaries are covered by similar contracts. Since 1957, neither the Company nor any of its subsidiaries has experienced any strikes or other labor disputes that materially affected its business activities. The Company considers labor relations with its employees to be very good.

Honda’s average number of temporary employees on a consolidated basis during the fiscal year ended March 31, 2024 was as follows.

Total	Motorcycle Business	Automobile Business	Financial Services Business	Power Products and Other Businesses
22,669	10,201	10,897	55	1,516

E. Share Ownership

The total amount of the Company’s voting securities owned by its Directors and Executive Officers as a group as of the filing date of this Annual Report is as follows. The individual ownership of each of the Directors and Executive Officers is listed next to their names under Item 6.A. Directors and Senior Management.

Title of Class	Amount Owned	% of Class
Common Stock	675,200 shares	0.014%

The Company’s full-time employees are eligible to participate in the Honda Employee Shareholders’ Association, whereby participating employees contribute a portion of their salaries to the Association and the Association purchases shares of the Company’s Common Stock on their behalf. As of March 31, 2024, the Association owned 21,239,741 shares of the Company’s common stock.

The Employee Stock Ownership Plan

From the fiscal year beginning from April 1, 2024, the Company resolved to introduce a stock grant scheme (the Scheme) for the purpose of further enhancing Operating Executives’ mindfulness toward contributing to the key initiatives and further support the creation of social and economic value with Executive Officers.

Outline of the Scheme

The Scheme is a stock grant scheme that uses an ESOP (Employee Stock Ownership Plan) trust (an “ESOP Trust”). An ESOP Trust is a scheme where, in the same way as performance share and restricted stock schemes in the U.S., shares in the Company and money are delivered and paid to Operating Executives in accordance with the Company’s Stock Grant Regulations.

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Content of trust agreement

Type of trust An individually-operated specified trust of money other than cash trust (third party beneficiary trust)

Purpose of trust To further enhance the attitude of Operating Executive of contributing toward the sustained improvement of corporate value of the Company in the medium to long term

Trustor The Company

Trustee Mitsubishi UFJ Trust and Banking Corporation

(Joint trustee: The Master Trust Bank of Japan, Ltd.)

Beneficiaries Employees who satisfy the beneficiary requirements

Trust administrator A third party which has no interests in the Company (a certified public accountant)

Date of trust agreement By August 31, 2024 (scheduled)

Period of trust From the date of trust agreement to August 31, 2027 (scheduled)

Exercise of voting rights of Company shares None

Class of shares acquired Common shares of the Company

Amount of trust money 2,940 million yen (scheduled) (including trust fees and trust expenses)

Timing of acquisition of shares By August 31, 2024 (scheduled)

(excluding the period from the fifth business day before the last day of each accounting period (including fiscal quarters) to the last day of such accounting period)

Method of acquisition of shares Acquisition from stock market

Holder of vested rights The Company

Residual assets The residual assets that the Company can obtain as a holder of vested rights shall be included in the trust expenses reserve

Total number of shares scheduled to be acquired by Operating Executives

1,615,000 shares (Total number of shares scheduled to be acquired for three fiscal years from 2024)

Scope of persons eligible to receive beneficiary rights and other rights under the Scheme

Operating Executives who satisfy the beneficiary requirements

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F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not applicable.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

As of March 31, 2024, 5,280,000,000 shares of Honda’s Common Stock were issued and 4,828,907,376 shares were outstanding.

The following table shows the shareholders of record that owned 5% or more of the issued shares of Honda’s Common Stock as of March 31, 2024:

Name	Shares owned (thousands)		Ownership (%)
The Master Trust Bank of Japan, Ltd. (Trust Account)		773,445		16.0
Custody Bank of Japan, Ltd. (Trust Account)		305,126		6.3
Moxley & Co. LLC*		259,782		5.4

* Moxley & Co., LLC is the nominee of JPMorgan Chase Bank, N.A., which acts as the Depositary for the Honda’s ADSs.

According to a statement on Schedule 13G (Amendment No. 9) filed by BlackRock, Inc. with the SEC on February 6, 2024, BlackRock, Inc. directly and indirectly held, as of December 31, 2023, 386,567,082, or 7.1% of the then issued shares, of Honda’s Common Stock.

None of the above shareholders has voting rights that are different from those of our other shareholders.

ADSs representing American Depositary Shares are issued by JPMorgan Chase Bank, N.A., as Depositary. The normal trading unit is 100 American Depositary Shares. Total issued shares of Honda as of the close of business on March 31, 2024 were 5,280,000,000 shares of Common Stock, of which 259,782,129 shares represented by ADSs and 964,170,376 shares not represented by ADSs were owned by residents of the United States. The number of holders of record of the Company’s shares of Common Stock in the United States was 218 on March 31, 2024.

To the knowledge of Honda, it is not directly or indirectly owned or controlled by any other corporation, by any government, or by any other natural or legal person or persons severally or jointly. As far as is known to the Company, there are no arrangements, the operation of which may at a subsequent date, result in a change in control of the Company.

B. Related Party Transactions

Honda purchases materials, supplies and services from numerous suppliers throughout the world in the ordinary course of business, including firms with which Honda is affiliated.

During the fiscal year ended March 31, 2024, Honda had sales of ¥959.9 billion and purchases of ¥2,062.7 billion with affiliates and joint ventures accounted for using the equity method. As of March 31, 2024, Honda had receivables of ¥342.2 billion from affiliates and joint ventures, and had payables of ¥310.7 billion to affiliates and joint ventures.

Honda does not consider the amounts involved in such transactions to be material to its business.

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C. Interests of Experts and Counsel

Not applicable.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

1 – 3. Consolidated Financial Statements

Honda’s audited consolidated financial statements are included under “Item 18—Financial Statements”.

4. Not applicable.

5. Not applicable.

6. Export Sales

See “Item 4—Information on the Company—Marketing and Distribution”.

7. Legal Proceedings

Various legal proceedings are pending against us. We believe that such proceedings constitute ordinary routine litigation incidental to our business.

Honda is subject to potential liability under various lawsuits and claims. Honda recognizes a provision for loss contingencies when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recognized for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel.

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and provision. Punitive damages are claimed in certain of these lawsuits.

After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position or results of operations.

8. Profit Redistribution Policy

The Company strives to carry out its operations worldwide from a global perspective and to increase its corporate value. With respect to the redistribution of profits to its shareholders, which we consider to be one of the most important management issues, the Company’s basic policy is to determine such distributions after taking into account, among others, its retained earnings for future growth and consolidated earnings performance based on a long-term perspective. With respect to dividends, the Company will strive to pay stable and continuous dividends aiming at a consolidated dividend payout ratio of approximately 30%.

The Company’s basic policy for dividends is to make semiannual distributions (an interim dividend and a year-end dividend). The Company may determine dividends from surplus by a resolution of the Board of Directors.

The Company may also acquire its own shares at a timing that it deems optimal, with the goal of improving efficiency of the Company’s capital structure and implementing a flexible capital strategy.

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Retained earnings will be allocated toward financing R&D activities that are essential for the future growth of the Company as well as for capital expenditures and investment programs that will expand its operations for the purpose of improving business results and maintaining the Company’s sound financial condition.

The Company determined semiannual dividends per share for the year ended March 31, 2024 were as follows: the interim ¥87, the year-end ¥39 per share.

Details of Distribution of Surplus (Record dates of the fiscal year ended March 31, 2024)

	Resolution of the Board of Directors		Resolution of the Board of Directors
	November 9, 2023		May 10, 2024
Dividend per Share of Common Stock (yen)		87.00		39.00
Total Amount of Dividends (millions of yen)		141,949		188,418

* As of the effective date of October 1, 2023, the Company implemented a three-for-one stock split of its common stock to shareholders as of the record date of September 30, 2023. The year-end dividend per share for the fiscal year ended March 31, 2024 is based on the number of shares after the stock split. Based on the number of shares prior to the stock split, the year-end dividend and the total annual dividend for the fiscal year ended March 31, 2024 are ¥117 per share and ¥204 per share, respectively.

B. Significant Changes

Except otherwise disclosed in this Annual Report on Form 20-F, no significant change has occurred since the date of the annual financial statements.

Item 9. The Offer and Listing

A. Offer and Listing Details

Honda’s shares have traded on the Tokyo Stock Exchange (TSE) since its shares were first listed on the TSE in 1957. Our ordinary shares are traded on the TSE under the symbol “7267”.

Since February 11, 1977, American Depositary Shares (each representing three shares of Common Stock and evidenced by American Depositary Receipts (ADRs)) have been listed and traded on the New York Stock Exchange (the NYSE) under the symbol “HMC”, having been traded on the over-the-counter markets in the United States since 1962.

B. Plan of Distribution

Not applicable.

C. Markets

See Item 9.A, “Offer and Listing Details”.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

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F. Expenses of the Issue

Not applicable.

Item 10. Additional Information

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Set forth below is certain information relating to Honda’s Common Stock, including brief summaries of the relevant provisions of Honda’s Articles of Incorporation and Share Handling Regulations as currently in effect, and of the Company Law and related legislation. Additionally, the information called for by Items 10.B.3, 4, 5, 6, 7, 8, 9 and 10 of Form 20-F is included in Exhibit 2.4 to this Annual Report “Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934—Common Stock” and is incorporated by reference herein.

Objects and Purposes

Article 2 of the Articles of Incorporation of Honda states that its purpose is to engage in the following businesses:

• Manufacture, sale, lease and repair of motor vehicles, ships and vessels, aircraft and other transportation machinery and equipment.

• Manufacture, sale, lease and repair of prime movers, agricultural machinery and appliances, generators, processing machinery and other general machinery and apparatus, electric machinery and apparatus and precision machinery and apparatus.

• Manufacture and sale of fiber products, paper products, leather products, lumber products, rubber products, chemical industry products, ceramic products, metal products and other products.

• Overland transportation business, marine transportation business, air transportation business, warehousing business, travel business and other transport business and communication business.

• Sale of sporting goods, articles of clothing, stationery, daily sundries, pharmaceuticals, drink and foodstuffs and other goods.

• Financial business, nonlife insurance agency business, life insurance agency business, construction business including building construction work and real estate business, including real estate brokerage.

• Publishing business, advertising business, translation business, interpretation business, management consultancy business, information services including information processing, information communication and information provision, industrial planning and design, comprehensive security business and labor dispatch services.

• Management of parking garages, driving schools, training and education facilities, racecourses, recreation grounds, sporting facilities, marina facilities, hotels, restaurants and other facilities.

• Electricity generation and supply and sale of electricity.

• Manufacture, sale and licensing of equipment, parts and supplies and all other relevant business activities and investments relating to each of the foregoing items.

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Provisions Regarding Directors and Executive Officers

There is no provision in Honda’s Articles of Incorporation as to a Director’s power to vote on a proposal, arrangement or contract in which the Director is materially interested, but the Company Law and Honda’s regulations of the Board of Directors provide that such Director is required to refrain from voting on such matters at the Board of Director’s meetings.

The Company Law provides that compensation for directors and executive officers of a company which adopts a “company with three committees” corporate governance system, including Honda, is determined at the compensation committee within the board of directors, and the Articles of Incorporation of the Company also include the equivalent provisions. The compensation committee shall establish the compensation policy as well as determine the compensation for directors and executive officers.

The Company Law provides that a significant loan from a third party to a company should be approved by the board of directors.

There is no mandatory retirement age for directors under the Company Law or Honda’s Articles of Incorporation.

The Company Law provides that any articles of incorporation of a company having no restriction on a transfer of its shares, including Honda, may not provide any requirement concerning the number of shares one individual must hold in order to qualify him or her as a director.

Shareholders’ Register Manager

With effect from June 20, 2020, Mitsubishi UFJ Trust and Banking Corporation, located at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-8212, Japan, is the Shareholders’ Register Manager for Honda’s shares. Mitsubishi UFJ Trust and Banking Corporation maintains Honda’s register of shareholders and records the names and addresses of its shareholders and other relevant information in its register of shareholders upon notice thereof from JASDEC, as described in Exhibit 2.4 to this Annual Report “Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934—Common Stock—Rights of the Shares—Record Date”.

C. Material Contracts

All contracts concluded by Honda during the two years preceding this filing were entered into in the ordinary course of business.

D. Exchange Controls

There are no laws, decrees, regulations or other legislation of Japan which materially affect our ability to import or export capital for our use or our ability to pay dividends or other payments to non-resident holders of our shares.

E. Taxation

Japanese Taxes

The following is a summary of the principal Japanese tax consequences as of the date of filing of this Form 20-F to owners of Honda’s shares or ADSs who are non-resident individuals or non-Japanese corporations without a permanent establishment in Japan to which income from Honda’s shares is attributable. The tax treatment is subject to possible changes in the applicable Japanese laws or double taxation conventions occurring

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after that date. This summary is not exhaustive of all possible tax considerations that may apply to a particular investor. Potential investors should consult their own tax advisers as to:

• the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law;

• the laws of the jurisdiction of which they are resident; and

• any tax treaty between Japan and their country of residence.

Generally, a non-resident of Japan or a non-Japanese corporation is subject to Japanese withholding tax on dividends paid by Japanese corporations.

In the absence of any applicable tax treaty, convention or agreement reducing the maximum rate of withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to a non-resident of Japan or a non-Japanese corporation is (a) 20.42% for dividends to be paid on or before December 31, 2037, and (b) 20% for dividends to be paid thereafter. With respect to dividends paid on listed shares issued by Japanese corporations (such as Honda’s shares) to a non-resident of Japan or a non-Japanese corporation, the aforementioned 20.42% or 20% withholding tax rate is reduced to (i) 15.315% for dividends to be paid on or before December 31, 2037, and (ii) 15% for dividends to be paid thereafter, except for dividends paid to any individual shareholder who holds 3% or more of the issued shares of that corporation. Japan has entered into income tax treaties, conventions or agreements with various countries, whereby the maximum withholding tax rate is generally set at 15% or 10% for portfolio investors. Under the income tax treaty between Japan and the United States, the maximum withholding tax rate is generally set at 10% for portfolio investors.

Pursuant to the Convention Between the United States of America and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “U.S.-Japan Tax Treaty”), a portfolio investor that is a U.S. holder is generally subject to Japanese withholding tax on dividends on shares at a rate of 10%. Under Japanese tax law, the maximum rate applicable under the tax treaties, conventions or agreements shall be applicable except when such maximum rate is more than the Japanese statutory rate.

Gains derived from the sale outside Japan of common stock or Depositary Receipts by a non-resident of Japan or a non-Japanese corporation, or from the sale of common stock within Japan by a non-resident of Japan or by a non- Japanese corporation not having a permanent establishment in Japan, are in general not subject to Japanese income or corporation taxes. Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired common stock or Depositary Receipt as a legatee, heir or donee, even if the individual is not a Japanese resident.

United States Taxes

This section describes the material U.S. federal income tax consequences of the ownership of shares or ADSs by U.S. holders, as defined below. It applies only to persons who hold shares or ADSs as capital assets for tax purposes.

This section is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect, as well as on the U.S.-Japan Tax Treaty (the “Treaty”). These authorities are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms.

For purposes of the Treaty and the Code, U.S. holders of ADRs evidencing ADSs will be treated as the owners of the shares represented by those ADRs. Exchanges of shares for ADRs and ADRs for shares generally will not be subject to U.S. federal income tax. For purposes of this discussion, a “U.S. holder” is a beneficial owner of shares or ADSs that is, for U.S. federal income tax purposes, (i) a citizen or resident individual of the

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United States, (ii) a domestic corporation, (iii) an estate whose income is subject to United States federal income tax regardless of its source, or (iv) a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust; and that, for purposes of the Treaty, is not ineligible for benefits under the Treaty with respect to income and gain from the shares or ADSs.

This section does not apply to a person who is a member of a special class of holders subject to special rules, including a dealer in securities, a trader in securities that elects to use a mark-to-market method of accounting for its securities holdings, a tax-exempt organization, a life insurance company, a person liable for alternative minimum tax, a person that actually or constructively owns 10% or more of the combined voting power of the voting stock or of the total value of the stock of Honda, a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction, a person that purchases or sells shares or ADSs as part of a wash sale for tax purposes, or a person whose functional currency is not the U.S. dollar.

If a partnership holds the shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the shares or ADSs should consult its tax advisor with regard to the U.S. federal income tax treatment of an investment in the shares or ADSs.

This summary is not a comprehensive description of all the tax considerations that may be relevant with respect to a U.S. holder’s shares or ADSs. Each beneficial owner of shares or ADSs should consult its own tax advisor regarding the U.S. federal, state and local and other tax consequences of owning and disposing of shares and ADSs in its particular circumstances.

Taxation of Dividends

Under the U.S. federal income tax laws, and subject to the passive foreign investment company, or PFIC, rules discussed below, the gross amount of any dividend paid by Honda out of its current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) to a U.S. holder is subject to U.S. federal income taxation. A U.S. holder must include any Japanese tax withheld from the dividend payment in this gross amount even though it does not in fact receive it.

Dividends paid to a noncorporate U.S. holder that constitute qualified dividend income will be taxable to such U.S. holder at the preferential rates applicable to long-term capital gains provided that the noncorporate U.S. holder holds the shares or ADSs with respect to which the dividends are paid for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meets other holding period requirements. Dividends that Honda pays with respect to the shares or ADSs generally will be qualified dividend income if, in the year you receive the dividend, the ADSs are readily tradable on an established securities market in the United States. Our ADSs are listed on the New York Stock Exchange and we therefore expect that dividends that you receive on the ADSs will be qualified dividend income. Dividends that Honda pays with respect to the shares generally will be qualified dividend income if we are eligible for the benefits of the Treaty in the year that you receive the dividend. We believe that we are currently eligible for the benefits of the Treaty, and we therefore believe that dividends on the shares are currently qualified dividend income. There can be no assurance, however, that we will continue to qualify under the Treaty in future taxable years.

A U.S. holder must include the dividend in its taxable income when the holder, in the case of shares, or the Depositary, in the case of ADSs, receives the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The amount of the dividend distribution that a U.S. holder must include in its income will be the U.S. dollar value of the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on the date of the dividend distribution, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period

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from the date the dividend is distributed to the date payment is converted into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the U.S. for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a non-taxable return of capital to the extent of U.S. holder’s basis in the shares or ADSs and thereafter as capital gain. However, Honda does not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, a U.S. holder should expect to generally treat distributions that Honda makes as dividends.

Subject to certain limitations, the Japanese tax withheld in accordance with the Treaty and paid over to Japan will be creditable or deductible against a U.S. holder’s United States federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates. To the extent a refund of the tax withheld is available to a U.S. holder under Japanese law or under the Treaty, the amount of tax withheld that is refundable will not be eligible for credit against the U.S. holder’s U.S. federal income tax liability.

Dividends will generally be income from sources outside the U.S. and will generally be “passive” income for purposes of computing the foreign tax credit allowable to such U.S. holder.

Taxation of Capital Gains

Subject to the PFIC rules discussed below, if a U.S. holder sells or otherwise disposes of its shares or ADSs, it will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount that it realizes and its tax basis, determined in U.S. dollars, in its shares or ADSs. Capital gain of a noncorporate U.S. holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the U.S. for foreign tax credit limitation purposes.

Passive Foreign Investment Company (PFIC) Rules

Honda believes its shares and ADSs should not be treated as stock of a PFIC for United States federal income tax purposes. This conclusion is a factual determination that is made annually and thus may be subject to change.

In general, Honda will be a PFIC with respect to a U.S. holder if for any taxable year in which such holder held shares or ADSs of Honda:

• at least 75% of Honda’s gross income for the taxable year is passive income; or

• at least 50% of the value, determined on the basis of a quarterly average, of Honda’s assets is attributable to assets that produce or are held for the production of passive income.

Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation and as receiving directly its proportionate share of the other corporation’s income.

If Honda is treated as a PFIC, and a U.S. holder does not make a mark-to-market election, as described below, that U.S. holder will be subject to special rules with respect to:

• any gain it realizes on the sale or other disposition of its shares or ADSs; and

• any excess distribution that Honda makes to the U.S. holder (generally, any distributions to it during a single taxable year that are greater than 125% of the average annual distributions received by it in

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respect of the shares or ADSs during the three preceding taxable years or, if shorter, the portion of its holding period for the shares or ADSs that preceded the current taxable year).

Under these rules:

• the gain or excess distribution will be allocated ratably over the U.S. holder’s holding period for the shares or ADSs,

• the amount allocated to the taxable year in which it realized the gain or excess distribution will be taxed as ordinary income,

• the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year, and

• the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.

Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.

If a U.S. holder owns shares or ADSs in a PFIC that are treated as marketable stock, such U.S. holder may make a mark-to-market election. If a U.S. holder makes this election, it will not be subject to the PFIC rules described above. Instead, in general, a U.S. holder will include as ordinary income each year the excess, if any, of the fair market value of its shares or ADSs at the end of the taxable year over its adjusted basis in its shares or ADSs. These amounts of ordinary income will not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. A U.S. holder will also be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its shares or ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously-included income as a result of the mark-to-market election). The U.S. holder’s basis in the shares or ADSs will be adjusted to reflect any such income or loss amounts.

Shares or ADSs held by a U.S. holder will be treated as stock in a PFIC if Honda was a PFIC at any time during the U.S. holder’s holding period in its shares or ADSs, even if Honda is not currently a PFIC, unless a U.S. holder has made a mark-to-market election with respect to its shares or ADSs or the U.S. holder has otherwise made a “purging election” with respect to its shares or ADSs.

In addition, notwithstanding any election that a U.S. holder makes with regard to the shares or ADSs, dividends that a U.S. holder receives from Honda will not constitute qualified dividend income to such U.S. holder if Honda is a PFIC (or is treated as a PFIC with respect to such U.S. holder) in either the taxable year of the distribution or the preceding taxable year. Dividends that a U.S. holder receives that do not constitute qualified dividend income are not eligible for taxation at the preferential rates applicable to qualified dividend income. Instead, the U.S. holder must include the gross amount of any such dividend paid by Honda in the U.S. holder’s gross income, and it will be subject to tax at rates generally applicable to ordinary income.

If a U.S. holder owns shares or ADSs during any year that Honda is a PFIC with respect to such U.S. holder, it must file Internal Revenue Service Form 8621, subject to certain applicable exceptions set forth in Internal Revenue Service regulations. Each U.S. holder should consult its own tax advisors regarding the PFIC rules and potential filing and other requirements.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

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H. Documents on Display

Honda is subject to the information requirements of the Securities Exchange Act of 1934 and, in accordance therewith, it will file annual reports on Form 20-F and furnish other reports and information on Form 6-K with the Securities and Exchange Commission. These reports and other information can be inspected without charge at the public reference room at the Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain copies of such material by mail from the public reference room of the Securities and Exchange Commission at prescribed fees. You may obtain information on the operation of the Securities and Exchange public reference room by calling the Securities and Exchange Commission in the United States at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a web site at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the Securities and Exchange Commission. Also, as a foreign private issuer, Honda is exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing and content of proxy statements to shareholders.

I. Subsidiary Information

Not applicable.

J. Annual Report to Security Holders

Not applicable.

Item 11. Quantitative and Qualitative Disclosure about Market Risk

The information required under this Item 11 is set forth in “(b) Market Risk” of note “(25) Financial Risk Management” to the accompanying consolidated financial statements.

Item 12. Description of Securities Other than Equity Securities

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

3. Fees and charges

JPMorgan Chase Bank, N.A., as ADR depositary, collects fees for delivery and surrender of ADSs directly from investors, or from intermediaries acting for them, depositing ordinary shares or surrendering ADSs for the purpose of withdrawal. The ADR depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of the distributable property to pay the fees.

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The charges of the ADR depositary payable by investors are as follows:

Category (as defined by SEC)	Depositary Actions	Associated Fee
(a) Depositing or substituting the underlying shares	Each person to whom ADRs are issued against deposits of Shares, including without limitation, deposits and issuances in respect of: •  Share distributions, stock split, rights, merger •  Exchange of securities or any other transaction or event or other distribution affecting the ADSs or the deposited securities	USD 5.00 for each 100 ADSs (or portion thereof) evidenced by the new ADRs delivered
(b) Receiving or distributing dividends	Any Cash distribution made, or for any elective cash/ stock dividend offered.	USD 0.05 or less per ADS
(c) Selling or exercising rights	Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities	USD 5.00 for each 100 ADSs (or portion thereof)
(d) Withdrawing an underlying security	Acceptance of ADRs surrendered for withdrawal of deposited securities	USD 5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs surrendered
(e) Transferring, splitting or grouping receipts	Transfers, combining or grouping of depositary receipts	Not applicable
(f) General depositary services, particularly those charged on an annual basis	Services performed by the depositary in administering the ADSs	An aggregate fee of USD 0.05 or less per ADS per calendar year (or portion thereof) which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders as of the record date or record dates set by the depositary during each calendar year and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions

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Category	Depositary Actions	Associated Fee
(g) Expenses of the depositary	Expenses incurred on behalf of holders in connection with
	•  The servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable law, rule or regulation.	Fees for the reimbursement of such fees, charges and expenses may be charged on a periodic basis during each calendar year and shall be assessed on a proportionate basis against holders as of the record date or record dates set by the depositary during each calendar year and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions.
	•  Stock transfer or other taxes and other governmental charges.	Fees for such charges to be payable by the holders or persons depositing shares.
	•  SWIFT, telex and facsimile transmission and delivery charges incurred at the request of persons depositing, or holders delivering shares, ADSs or deposited securities.	Fees for such charges to be payable by the persons depositing or holders delivering shares, ADSs or deposited securities.
	•  Transfer or registration fees for the registration or transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities.	Fees for such charges to be payable by the persons depositing shares or holders withdrawing deposited securities.
	•  In connection with the conversion of foreign currency into U.S. dollars, transferring foreign currency or U.S. dollars to the United States, obtaining any approval or license of any governmental authority required for such conversion or transfer or making any sale.	To be deducted from cash distributed to holders.

4. Direct / Indirect Payment Disclosure

The Depositary has agreed to contribute to Honda a portion of certain fees received by the Depositary under the deposit agreement. From April 1, 2023 to March 31, 2024, such contributions totaled US$4,587,323.52. Additionally, from April 1, 2023 to March 31, 2024, the Depositary waived US$271,793.67 in expenses related to the Ordinary General Meeting of Shareholders.

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and participation of our management, including our Chief Executive Officer and Chief Financial Officer, we performed an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934) as of March 31, 2024. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of that date.

Management’s Report on Internal Control over Financial Reporting

The management of Honda is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

Our management assessed the effectiveness of internal control over financial reporting as of March 31, 2024 based on the criteria established in “Internal Control-Integrated Framework (2013)” published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that assessment, our management concluded that our internal control over financial reporting was effective as of March 31, 2024.

KPMG AZSA LLC (PCAOB ID:1009), the Company’s independent registered public accounting firm, has audited the effectiveness of the Company’s internal control over financial reporting, as stated in their report which is included herein.

Changes in Internal Control over Financial Reporting

No significant changes were made in our internal control over financial reporting for the fiscal year ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Item 16A. Audit Committee Financial Expert

Honda’s Audit Committee has determined that Mr. Yoichiro Ogawa and Mr. Jiro Morisawa are each qualified as an “audit committee financial expert” as defined by the rules of the SEC. Additionally, Mr. Ogawa and Mr. Morisawa each meet the independence requirements applicable under Section 303A.06 of the New York Stock Exchange Listed Company Manual.

Item 16B. Code of Ethics

Honda has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of Honda’s code of ethics is attached as an exhibit to this Annual Report on Form 20-F.

Item 16C. Principal Accountant Fees and Services

KPMG AZSA LLC has served as Honda’s independent registered public accounting firm for each of the fiscal years in the three-year period ended March 31, 2024, for which audited financial statements appear in this Annual Report on Form 20-F.

The following table presents the aggregate fees for professional services and other services rendered by KPMG AZSA LLC and the various member firms of KPMG International to Honda in fiscal year 2023 and 2024:

	Yen (millions)
	2023		2024
Audit Fees	¥	5,295	¥	5,624
Audit-Related Fees		153		171
All Other Fees		11		—
Total	¥	5,459	¥	5,795

“Audit Fees” means fees for audit services, which are professional services provided by independent auditors for the audit of our annual financial statements or for services that are normally provided by independent auditors with respect to any submissions required under applicable laws and regulations.

“Audit-Related Fees” means fees for audit-related services, which are assurance services provided by independent auditors that are reasonably related to the carrying out of auditing or reviewing of our financial reports and other related services. This category includes fees for agreed-upon or expanded audit procedures related to accounting and/or other records.

“All Other Fees” mainly includes fees for services rendered with respect to advisory services.

Pre-approval policies and procedures of the Audit Committee

Under applicable SEC rules, the Audit Committee must pre-approve audit services, audit-related services, tax services and other services to be provided by the principal accountant to ensure that the independence of the principal accountant under such rules is not impaired as a result of the provision of any of these services.

While, as a general rule, specific pre-approval must be obtained for these services to be provided, the Audit Committee has adopted pre-approval policies and procedures which list particular audit and non-audit services that may be provided without specific pre-approval. The Audit Committee reviews this list of services on an annual basis, and is informed of each such service that is actually provided.

All services to be provided to us by the principal accountant and its affiliates which are not specifically set forth in this list must be specifically pre-approved by the Audit Committee.

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None of the services described above in this Item 16C. were waived from the pre-approval requirements pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets forth certain information with respect to purchases by Honda of its own shares during the fiscal year ended March 31, 2024. There were no purchases of Honda’s shares by its affiliated purchasers during that fiscal year.

Period	(a) Total Number of Shares Purchased*1*3		(b) Average Price Paid per Share*3		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs*3		(d) Maximum Yen Amount of Shares that May Yet Be Purchased Under the Plans or Programs*2*3
April 1 to April 30, 2023		3,700,848	¥	3,514		3,700,800		154,400
May 1 to May 31, 2023		5,354,884	¥	3,922		5,354,800		178,999,588,400
June 1 to June 30, 2023		5,937,646	¥	4,295		5,937,400		174,499,895,300
July 1 to July 31, 2023		6,914,978	¥	4,339		6,914,700		170,000,477,200
August 1 to August 31, 2023		7,307,058	¥	4,516		7,307,000		167,001,197,700
September 1 to September 30, 2023		4,444,516	¥	5,063		4,444,200		144,500,542,200
October 1 to October 31, 2023		19,310,364	¥	1,631		19,309,400		113,000,466,000
November 1 to November 30, 2023		19,052,798	¥	1,575		19,052,500		83,000,472,550
December 1 to December 31, 2023		4,309,362	¥	1,508		4,309,200		76,500,160,050
January 1 to January 31, 2024		278	¥	1,553		—		76,500,160,050
February 1 to February 29, 2024		436	¥	1,721		—		50,000,000,000
March 1 to March 31, 2024		20,890,339	¥	1,795		20,889,800		12,501,389,650
Total		97,223,507	¥	2,577		97,219,800

*1 For each month, the number of shares shown in column (a) in excess of the number of shares shown in column (c) represents the aggregate number of shares representing less than one unit that Honda purchased from the holders thereof upon their request. For an explanation of the right of such holders, see “Japanese Unit Share System” and “Right of a Holder of Shares Representing Less Than One Voting Unit to Require Honda to Purchase or Sell Its Shares” under Item 10.B of this Annual Report. Total number of shares purchased does not include purchases of BIP trust.

*2 During the year ended March 31, 2024, the following share repurchase programs were in effect:

Share repurchase was resolved at the meeting of the Board of Directors pursuant to the articles of incorporation

Date of announcement: May 11, 2023

Maximum number of shares authorized to be repurchased: 64,000,000 (does not reflect stock split discussed in Note 3)

Maximum yen amount authorized to be used for repurchase: ¥200,000,000,000

Repurchase period: from May 12, 2023 to March 31, 2024

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Share repurchase was resolved at the meeting of the Board of Directors pursuant to the articles of incorporation

Date of announcement: February 8, 2024

Maximum number of shares authorized to be repurchased: 34,000,000

Maximum yen amount authorized to be used for repurchase: ¥50,000,000,000

Repurchase period: from March 1, 2024 to April 30, 2024

*3 The Company implemented a three-for-one stock split of its common stock to shareholders as of the record date of September 30, 2023, with an effective date of October 1, 2023. Share numbers in the table above for the period from April 1, 2023 through September 30, 2023 reflect the number of shares prior to the stock split. Share numbers in the table above for the period from October 1, 2023 through March 31, 2024 reflect the number of shares after the stock split.

Item 16F. Change in Registrant’s Certifying Accountant

Not applicable.

Item 16G. Corporate Governance

Companies listed on the New York Stock Exchange (the “NYSE”) must comply with certain standards regarding corporate governance under Section 303A of the NYSE Listed Company Manual.

However, listed companies that are foreign private issuers, such as Honda, are permitted to follow home country practice in lieu of certain provisions of Section 303A.

The following table shows the significant differences between the corporate governance practices followed by U.S. listed companies under Section 303A of the NYSE Listed Company Manual and those followed by Honda.

Corporate Governance Practices Followed by NYSE-listed U.S. Companies	Corporate Governance Practices Followed by Honda
A NYSE-listed U.S. company must have a majority of directors meeting the independence requirements under Section 303A of the NYSE Listed Company Manual.	Honda has adopted a “company with three committees” corporate governance system (the “Three Committees system”) under the Company Law.
	For Japanese companies which employ the Three Committees system, including Honda, the Company Law requires that such companies have a board of directors and one or more executive officers, and within the board of directors, a nominating committee (the “Nominating Committee”), an audit committee (the “Audit Committee”), and a compensation committee (the “Compensation Committee”) shall be established. Each of these committees shall consist of three or more directors, a majority of which shall be “outside directors” as defined below. Honda’s Articles of Incorporation provides for its Board of Directors consisting of no more than fifteen members. Honda currently has twelve Directors (including six Outside Directors) and sixteen Executive Officers (including four Executive Officers who also serve as Directors). The

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Corporate Governance Practices Followed by NYSE-listed U.S. Companies	Corporate Governance Practices Followed by Honda
	Nominating Committee has five members, of which four are Outside Directors. The Audit Committee has five members, of which three are Outside Directors. The Compensation Committee has four members, of which three are Outside Directors. Under the Company Law, the members of three committees are elected by the resolutions of the board of directors. In addition, Honda’s regulations of each of the three committees provide that the chairperson of each committee shall be elected from the Outside Directors who are members of the relevant committee by the resolution of the Board of Directors.
	“Outside director” is defined as a director who meets all of the following independence requirements: the relevant person must be (1) a person who is not an executive director, executive officer, manager or any other employee of the company or any of its subsidiaries and has not been in such position for ten years prior to the assumption of office; (2) if the relevant person assumed an office of a non-executive director, accounting councilor or corporate auditor of the company or any of its subsidiaries during the ten years mentioned in (1) above, a person who had not been an executive director, executive officer, manager or any other employee of the company or any of its subsidiaries for further ten years prior to the assumption of such office; (3) a person who is not a director, corporate auditor, executive officer, manager or any other employee of the parent company or who is not a natural person controlling the company; (4) a person who is not an executive director, executive officer, manager or any other employee of a company which is controlled by the parent company or by the natural person controlling the company; and (5) a person who is not a spouse or one of a certain kinds of relatives of (a) a director, executive officer, manager or any other important employee of the company or (b) the natural person controlling the company. Companies which employ the Three Committees system, including Honda shall have at least two “outside directors”.
	In addition, the listing rules of the Tokyo Stock Exchange, which Honda is subject to (but reference to “corporate auditor” below is not applicable to Honda), require listed companies to have at least one “independent” director or corporate auditor, and to make efforts to have at least one “independent”

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Corporate Governance Practices Followed by NYSE-listed U.S. Companies	Corporate Governance Practices Followed by Honda
	director. Requirements for an independent director/ corporate auditor are more stringent than those for outside directors or outside corporate auditors. Unlike an outside director/corporate auditor, an independent director/corporate auditor may not be (a) a person who is, or has been until recently, a major business counterparty or an executive director, executive officer, manager or employee of the major business counterparties, (b) a person who is, or has been until recently, a professional advisor receiving significant remuneration from the company, (c) a person who has been, for ten years prior to the assumption of office, a director, executive officer, manager or employee, or corporate auditor of the parent company or an executive director or executive officer, manager or employee of the parent company’s subsidiaries, or (d) a relative of persons mentioned in (a), (b) and (c) or a relative of certain scope of persons such as directors of the parent company or any of its subsidiaries. Currently, Honda has six Outside Directors all of whom are also independent Directors. Furthermore, Honda has established additional independence requirements for the Outside Directors, the “Criteria for Independence of Outside Directors” as described in Exhibit 1.4 by the resolution of the Board of Directors, and all of the Outside Directors meet the criteria.
A NYSE-listed U.S. company must have an audit committee composed entirely of independent directors meeting the independence requirements under Section 303A.02 of the NYSE Listed Company Manual, and the audit committee must have at least three members.	Honda has an Audit Committee, as one of the Three Committees within its Board of Directors. Honda is required to satisfy the requirements set forth Rule 10A-3 under the U.S. Securities Exchange Act of 1934 relating to listed company audit committees. However, as a foreign private issuer, Honda is not subject to the independence requirements applicable to U.S. issuers pursuant to Section 303A.02 of the NYSE Listed Company manual. Additionally, as a foreign private issuer, Honda is not subject to the additional requirements under the Section 303A .07 of the NYSE Listed Company manual, including that the audit committee be made up of at least three members.
	Under the Company Law, the audit committee has the following responsibilities: (i) auditing the execution of duties by directors and executive officers, and preparing audit reports and (ii) determining the content of proposals regarding the election and dismissal of accounting auditors and

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Corporate Governance Practices Followed by NYSE-listed U.S. Companies	Corporate Governance Practices Followed by Honda
	the refusal to reelect accounting auditors to be submitted to a general meeting of shareholders. The Audit Committee shall consist of at least three directors and a majority shall be outside directors. Each director, including an Audit Committee member, has a one-year term. Honda’s regulations of the Audit Committee provide that full-time member of the Audit Committee shall be established by the resolution of the Board of Directors.
A NYSE-listed U.S. company must have a nominating/corporate governance committee entirely of independent directors.	Honda’s Directors are elected at a general meeting of shareholders. Its Board of Directors does not have the power to fill vacancies thereon. A proposal to elect a Director must be determined by the Nominating Committee and Honda’s Board of Directors itself does not have the power to determine a proposal to elect a Director. Under the Company Law, the Nominating Committee is responsible for determining the content of proposals regarding the election and dismissal of directors to be submitted to a general meeting of shareholders. The Nominating Committee shall consist of at least three directors and a majority shall be outside directors. Each director, including a Nominating Committee member, has a one-year term.
A NYSE-listed U.S. company must have a compensation committee composed entirely of independent directors. Compensation committee members must satisfy the additional independence requirements under Section 303A.02(a)(ii) of the NYSE Listed Company Manual. A compensation committee must also have authority to retain or obtain the advice of compensation and other advisers, subject to prescribed independence criteria that the committee must consider prior to engaging any such adviser.	The compensation of Honda’s Directors and Executive Officers is determined by the Compensation Committee within the Board of Directors, and a General Meeting of Shareholders of the Company does not have the power to determine the compensation of Directors. Under the Company Law, the Compensation Committee shall establish the compensation policy as well as determine the compensation for directors and executive officers. The Compensation Committee shall consist of at least three directors and a majority shall be outside directors. Each director, including a Compensation Committee member, has a one-year term.
A NYSE-listed U.S. company must generally obtain shareholder approval with respect to any equity compensation plan.	Honda has a stock compensation scheme (the “Scheme”) for Executive Officers and a part of Operating Executives of the Company who are residents of Japan (collectively, “Executive Officers Etc.”). Under the Scheme, which uses a Board Incentive Plan trust (the “BIP Trust”), Honda’s

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Corporate Governance Practices Followed by NYSE-listed U.S. Companies

Corporate Governance Practices Followed by Honda

shares and money will be delivered and paid to Executive Officers Etc. in accordance with their positions and the degree of growth in management indicators of Honda such as performance and corporate value. The period of the BIP Trust shall be from September 2021 to August 2024 (scheduled), provided, however, that this period may be extended by a resolution of the Compensation Committee for another three years by amending the trust agreement and entrusting additional amounts to the BIP Trust within the scope of the approval at the Ordinary General Meeting of Shareholders.

Item 16H. Mine Safety Disclosure

Not applicable.

Item 16I. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections

Not applicable.

Item 16J. Insider Trading Policies

Honda has adopted Guidelines on Insider Information Control and Insider Trading Regulation (hereinafter referred to as the “Guidelines”), which govern the purchase, sale, and other disposal of the Company’s securities by directors, executive officers, and employees.

Honda believes that the Guidelines are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to Honda.

A copy of the Guidelines is attached as an exhibit to this Annual Report on Form 20-F.

Item 16K. Cybersecurity

Risk Management and Strategy

Honda has established a management system and standards for information system security in order to minimize the negative impact on its business and business results from the occurrence of cybersecurity incidents. Based on these standards, we have implemented security measures in both hardware and software aspects to strengthen the security of our information systems. To address security, including product security, we have established a cross-functional system across business and manufacturing systems, software, quality, and other areas.

We develop rules and procedures based on laws and regulations, formulate response flows, verify and implement measures for improvement through cybersecurity exercises, and develop human resources, among other things. We also utilize solutions for managing cybersecurity information and monitoring malicious activities to monitor and analyze cybersecurity threats and vulnerabilities, and in the event of a security incident related to a cyberattack with a significant impact on Honda, we establish a Global Emergency Headquarters under the supervision and monitoring of the Risk Management Officer, and the supervisory division in charge of risks from cybersecurity threats plays a central role in quickly ascertaining the actual situation and taking measures to minimize the impacts of cybersecurity incidents from a company-wide perspective.

134

When implementing third-party packaged software and cloud services, we make decisions based on risk assessments following established security standards and conduct annual checks after implementation. In response to cyberattacks on production facilities and suppliers, we verify the status of security measures at both domestic and overseas production facilities and suppliers. Based on the results of these verifications, we take measures to strengthen security, such as supporting the introduction of solutions for managing cybersecurity incident information, and monitoring malicious activities. For such activities to strengthen security, we have concluded outsourcing agreements with security consulting companies and external specialists to receive support.

With regard to personal information protection regulations and cybersecurity-related laws and regulations in various countries, in addition to current regulations, we collect and monitor information on regulatory trends that are expected to be enforced in the future.

These comprehensive cybersecurity response processes are incorporated into Honda’s comprehensive risk management system and will be discussed in detail in the following “Governance” section.

For a description of information security-related risks, including risks from cybersecurity threats, identified by Honda as of the filing date of this Annual Report, please refer to Item 3. “Key Information—D. Risk Factors—Information Security Risks”.

Honda has been targeted by cyberattacks in the past; however, no risks from cybersecurity threats have been identified that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition, over the past three fiscal years, including the fiscal year that is the subject of this annual report.

Governance

Based on the resolution of the Board of Directors, the Board of Directors has appointed the Director, Executive Vice President and Representative Executive Officer as the Risk Management Officer, who monitors and supervises the response status of significant risks, including risks from cybersecurity threats.

The Risk Management Committee, chaired by the Risk Management Officer, has been established to deliberate on important matters related to risk management, including risk from cybersecurity threats. Honda has established the Honda Global Risk Management Policy, which stipulates the Company’s basic policy for risk management, the collection of risk information, and the response system in the event of risk occurrence.

In accordance with the aforementioned Policy, Honda has designated its cybersecurity supervisory divisions to conduct risk assessments and report the status of cybersecurity risk responses to the Risk Management Officer through the Risk Management Committee. The designated cybersecurity supervisory divisions consisted of 64 members as of the filing date of this Annual Report with practical experience in various roles related to information technology, including security, auditing, and systems are established in both the Quality Innovation Operations and Corporate Administration Operations divisions. The Risk Management Officer, who has knowledge and experience in overall risk management, receives technical support from the cybersecurity risk supervisory divisions, and monitors and supervises the responses to risks from cybersecurity threats.

In the event of a material cybersecurity incident, the cybersecurity risk supervisory divisions are to immediately report it to the Risk Management Officer. Upon receiving the report, the Risk Management Officer is to establish a Global Emergency Headquarters, which coordinate with relevant organizations affected by the incident in order to prevent and contain the crisis. Such response status is reported to the Board of Directors and the Executive Council as necessary based on the judgment of the Risk Management Officer.

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PART III

Item 17. Financial Statements

Not applicable.

Item 18. Financial Statements

See Consolidated Financial Statements attached hereto.

136

Item 19. Exhibits

1.1	Articles of Incorporation of the registrant (English translation) *1
1.2	Share Handling Regulations of the registrant (English translation)*2
1.3	Regulations of the Board of Directors of the registrant (English translation)*3
1.4	Honda Motor Co., Ltd. Criteria for Independence of Outside Directors (English translation) *4
2.1	Specimen common stock certificates of the registrant (English translation) *5
2.2	Form of Second Amended and Restated Deposit Agreement dated as of March 2022, among the registrant, JPMorgan Chase Bank, N.A., as Depositary, and holders and beneficial owners of American Depositary Receipts *6
2.3	Form of Amendment No. 1 to Second Amended and Restated Deposit Agreement, dated September 29, 2023, among the registrant, JPMorgan Chase Bank, N.A., as Depositary and holders and beneficial owners of American Depositary Receipts *7
2.4	Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934
8.1	List of Significant Subsidiaries (See “Organizational Structure” in Item 4.C of this Form 20-F)
11.1	Code of Ethics *8
11.2	Guidelines on Insider Information Control and Insider Trading Regulation (English translation)
12.1	Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)
12.2	Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)
13.1	Certification of the chief executive officer required by 18 U.S.C. Section 1350
13.2	Certification of the chief financial officer required by 18 U.S.C. Section 1350
15.1	Consent of Independent Registered Public Accounting Firm
97.1	Policy to Recover Erroneously Awarded Incentive-based Compensation (English translation)
101.INS	Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	The cover page for the Company’s Annual Report on Form 20-F for the year ended March 31, 2024, has been formatted in Inline XBRL

*1 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on June 23, 2021.

*2 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on June 23, 2023.

*3 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on June 23, 2023.

*4 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on June 23, 2021.

*5 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on September 27, 2001. (P)

*6 Incorporated by reference to the registration statement for American Depositary Shares on Form F-6 (File No. 333-263937) filed by JPMorgan Chase Bank, N.A. as depositary, on March 29, 2022.

*7 Incorporated by reference to Post-Effective Amendment No. 1 to the registration statement for American Depositary Shares on Form F-6 (File No. 333-263937) filed by JPMorgan Chase Bank, N.A. as depositary, on September 21, 2023.

*8 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on July 9, 2004.

The Company has not included as exhibits certain instruments with respect to its long-term debt, the amount of debt authorized under each of which does not exceed 10% of its total assets, and it agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

(P) Paper exhibits

137

HONDA MOTOR CO., LTD.

(Honda Giken Kogyo Kabushiki Kaisha)

(A Japanese Company)

AND SUBSIDIARIES

Consolidated Financial Statements

and

Reports of Independent Registered

Public Accounting Firm

March 31, 2024

To be Included in

The Annual Report

Form 20-F

Filed with

The Securities and Exchange Commission

Washington, D.C., U.S.A.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm	F-3
Consolidated Statements of Financial Position – March 31, 2023 and 2024	F-8
Consolidated Statements of Income – Years ended March 31, 2022, 2023 and 2024	F-9
Consolidated Statements of Comprehensive Income – Years ended March 31, 2022, 2023 and 2024	F-10
Consolidated Statements of Changes in Equity – Years ended March 31, 2022, 2023 and 2024	F-11
Consolidated Statements of Cash Flows – Years ended March 31, 2022, 2023 and 2024	F-12
Notes to Consolidated Financial Statements	F-13

Financial statements of affiliates and joint ventures are omitted because such affiliates and joint ventures are not individually significant.

F-2

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Honda Motor Co., Ltd.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Honda Motor Co., Ltd. and subsidiaries (the “Company”) as of March 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2024, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2024, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 20, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the provision for specific warranty programs

As discussed in Note 17 to the consolidated financial statements, the Company’s provisions for product warranties as of March 31, 2024 amounted to ¥815,190 million, which included the provision for specific

F-3

warranty programs such as product recalls. The provision for specific warranty programs represents the estimated future warranty costs that are covered under such programs. The estimated future warranty costs are provided based on historical warranty claim experience with consideration given to the expected level of future warranty costs, including the expected number of units to be affected and the average repair cost per unit for warranty claims.

We identified the evaluation of the provision for specific warranty programs as a critical audit matter. A high degree of auditor judgment was required to evaluate the Company’s estimate of the expected number of units to be affected and the average repair cost per unit, due to the degree of subjectivity associated with such assumptions.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s product warranty accrual process. This included controls related to the development of the assumptions regarding the expected number of units to be affected and the average repair cost per unit. We assessed the Company’s assumptions regarding the expected number of units to be affected and the average repair cost per unit by evaluating:

• the consistency of the Company’s assumptions with recent historical trends of warranty costs, taking into account changes in conditions and events affecting the Company,

• input data used to develop those assumptions by testing the consistency of the data with underlying documents and historical claims data, and

• facts and circumstances related to specific warranty programs identified after year end but before the consolidated financial statements were issued, and the impact, if any, of such facts and circumstances on the expected number of units to be affected and the average repair cost per unit underlying the provision for specific warranty programs at year end.

Allowance for expected credit losses on retail receivables at the finance subsidiary in the United States

As discussed in Note 7 to the consolidated financial statements, the Company’s allowance for expected credit losses (ECL) related to receivables from financial services was ¥68,999 million as of March 31, 2024, which included the allowance for ECL on retail receivables which amounted to ¥65,479 million. The allowance for ECL on retail receivables is measured at amounts according to the ECL methodology, including the determination on whether credit risk increased significantly since initial recognition. ECL is a probability-weighted estimate of the difference between the contractual cash flows and the cash flows that the Company expects to receive, which can be affected by forward-looking economic conditions. At the finance subsidiary in the United States, ECL on retail receivables is determined for groups of financial assets based on relevant risk characteristics including borrower, collateral and macroeconomic risk characteristics.

We identified the assessment of the allowance for ECL on retail receivables at the finance subsidiary in the United States as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment due to measurement uncertainty. Specifically, the assessment encompassed the evaluation of the ECL methodology, including (1) the methods and models used to derive the allowance for ECL and significant increases in credit risk since initial recognition and (2) the selection of the forward-looking economic conditions and the probability weightings. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the allowance for ECL estimate, including controls related to:

• continued use and appropriateness of the ECL methodology and models, including the determination of significant increases in credit risk since initial recognition and the selection of the forward-looking economic conditions and the probability weightings,

F-4

• analysis of model results as compared to actual loss performance, and

• re-evaluation of the model used to estimate expected credit losses.

We evaluated the Company’s process to develop the allowance for ECL by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors, and assumptions. In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s ECL methodology for compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board,

• assessing the conceptual soundness and performance testing of the models by inspecting model documentation to determine whether the models are consistent with the model methodology and are suitable for their intended use,

• evaluating the Company’s method to measure significant increases in credit risk since initial recognition by performing a sensitivity analysis over the significant increase in credit risk threshold,

• assessing the selection of the forward-looking economic conditions and the probability weightings by comparing them to the Company’s business environment and relevant industry practices, and

• evaluating model back-testing results to verify model output is consistent with actual loss performance.

We also assessed the sufficiency of the audit evidence obtained by evaluating the:

• cumulative results of the audit procedures,

• qualitative aspects of the Company’s accounting practices, and

• potential bias in the accounting estimates.

Estimated end of term residual values of lease vehicles at the finance subsidiary in the United States

As discussed in Note 3(f) to the consolidated financial statements, depreciation of equipment on operating leases is calculated on the straight-line method over the lease term. The Company’s equipment on operating leases as of March 31, 2024 was ¥5,202,768 million, which included leased vehicles at the finance subsidiary in the United States. Equipment on operating leases is depreciated to the lower of contract residual value or estimated end of term residual value, and adjustments to estimated end of term residual values are made prospectively on a straight-line basis over the remaining term of the lease. At the finance subsidiary in the United States, the primary factors that affect estimated end of term residual values of leased vehicles are the percentage of leased vehicles expected to be returned by the lessees and the expected market values of leased vehicles at the end of their lease terms. Factors considered in this evaluation include, among other factors, economic conditions, external market information on new and used vehicles, historical trends, and recent auction values.

We identified the assessment of estimated end of term residual values of leased vehicles at the finance subsidiary in the United States as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment due to measurement uncertainty. Specifically, complex auditor judgment was required to assess the residual value methodology, the model used to estimate the percentage of leased vehicles expected to be returned by the lessee at the end of the lease term and the expected market values of leased vehicles at the end of the lease term. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the end of term residual values of lease vehicles estimate, including controls related to the:

• development of the residual value methodology, including the identification and determination of the expected market values of leased vehicles at the end of the lease term assumption,

F-5

• continued use and appropriateness of the model used to estimate the percentage of leased vehicles expected to be returned,

• evaluation of the percentage of lease vehicles expected to be returned by the lessees as compared to actual vehicles returned, and

• analysis of the actual gain or loss recorded on the disposition of lease vehicles.

We evaluated the Company’s process to develop the estimated end of term residual values of lease vehicles by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors, and assumptions. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s residual value methodology for compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board,

• assessing the conceptual soundness and performance testing of the model by inspecting model documentation to determine whether the model is consistent with the model methodology and is suitable for their intended use, and

• evaluating the Company’s expected market values of leased vehicles at the end of the lease term assumption by comparing it to specific portfolio risk characteristics and trends.

We also assessed the sufficiency of the audit evidence obtained by evaluating the:

• cumulative results of the audit procedures,

• qualitative aspects of the Company’s accounting practices, and

• potential bias in the accounting estimates.

/s/ KPMG AZSA LLC

We have served as the Company’s auditor since 1962.

Tokyo, Japan

June 20, 2024

F-6

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Honda Motor Co., Ltd.:

Opinion on Internal Control Over Financial Reporting

We have audited Honda Motor Co., Ltd. and subsidiaries’ (the “Company”) internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of March 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated June 20, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG AZSA LLC

Tokyo, Japan

June 20, 2024

F-7

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Financial Position

March 31, 2023 and 2024

			Yen (millions)
	Note		2023			2024
Assets
Current assets:
Cash and cash equivalents		5	¥	3,803,014		¥	4,954,565
Trade receivables		6		1,060,271			1,240,090
Receivables from financial services		7		1,899,493			2,558,594
Other financial assets		8		263,892			229,583
Inventories		9		2,167,184			2,442,969
Other current assets				384,494			446,763
Total current assets				9,578,348			11,872,564
Non-current assets:
Investments accounted for using the equity method		10		915,946			1,206,968
Receivables from financial services		7		3,995,259			5,616,676
Other financial assets		8		855,070			968,142
Equipment on operating leases		11		4,726,292			5,202,768
Property, plant and equipment		12		3,168,109			3,234,413
Intangible assets		13		870,900			999,689
Deferred tax assets		23		105,792			170,856
Other non-current assets				454,351			502,074
Total non-current assets				15,091,719			17,901,586
Total assets			¥	24,670,067		¥	29,774,150
Liabilities and Equity
Current liabilities:
Trade payables		14	¥	1,426,333		¥	1,609,836
Financing liabilities		15		3,291,195			4,105,590
Accrued expenses				419,570			638,319
Other financial liabilities		16		324,110			340,858
Income taxes payable				86,252			157,410
Provisions		17		362,701			566,722
Other current liabilities				741,963			904,757
Total current liabilities				6,652,124			8,323,492
Non-current liabilities:
Financing liabilities		15		4,373,973			6,057,967
Other financial liabilities		16		288,736			316,919
Retirement benefit liabilities		18		255,852			284,844
Provisions		17		270,169			385,001
Deferred tax liabilities		23		877,300			855,067
Other non-current liabilities				449,622			544,988
Total non-current liabilities				6,515,652			8,444,786
Total liabilities				13,167,776			16,768,278
Equity:
Common stock				86,067			86,067
Capital surplus				185,589			205,073
Treasury stock				(484,931	)		(550,808	)
Retained earnings				9,980,128			10,644,213
Other components of equity				1,417,397			2,312,450
Equity attributable to owners of the parent				11,184,250			12,696,995
Non-controlling interests				318,041			308,877
Total equity		19		11,502,291			13,005,872
Total liabilities and equity			¥	24,670,067		¥	29,774,150

See accompanying notes to consolidated financial statements.

F-8

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income

Years ended March 31, 2022, 2023 and 2024

		Yen (millions)
	Note	2022			2023			2024
Sales revenue	20	¥	14,552,696		¥	16,907,725		¥	20,428,802
Operating costs and expenses:
Cost of sales			(11,567,923	)		(13,576,133	)		(16,016,659	)
Selling, general and administrative			(1,326,485	)		(1,669,908	)		(2,106,539	)
Research and development	21		(787,056	)		(880,915	)		(923,627	)
Total operating costs and expenses			(13,681,464	)		(16,126,956	)		(19,046,825	)
Operating profit			871,232			780,769			1,381,977
Share of profit of investments accounted for using the equity method	10		202,512			117,445			110,817
Finance income and finance costs:
Interest income	22		25,627			73,071			173,695
Interest expense	22		(16,867	)		(36,112	)		(59,631	)
Other, net	22		(12,314	)		(55,608	)		35,526
Total finance income and finance costs			(3,554	)		(18,649	)		149,590
Profit before income taxes			1,070,190			879,565			1,642,384
Income tax expense	23		(309,489	)		(162,256	)		(459,794	)
Profit for the year		¥	760,701		¥	717,309		¥	1,182,590
Profit for the year attributable to:
Owners of the parent			707,067			651,416			1,107,174
Non-controlling interests			53,634			65,893			75,416
		Yen
		2022			2023			2024
Earnings per share attributable to owners of the parent Basic and diluted	24	¥	137.03		¥	128.01		¥	225.88

See accompanying notes to consolidated financial statements.

F-9

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years ended March 31, 2022, 2023 and 2024

		Yen (millions)
	Note	2022			2023			2024
Profit for the year		¥	760,701		¥	717,309		¥	1,182,590
Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans			117,042			3,350			(18,931	)
Net changes in revaluation of financial assets measured at fair value through other comprehensive income			58,635			(18,465	)		(25,469	)
Share of other comprehensive income of investments accounted for using the equity method	10		1,786			292			8,300
Items that may be reclassified subsequently to profit or loss
Net changes in revaluation of financial assets measured at fair value through other comprehensive income			(682	)		(474	)		56
Exchange differences on translating foreign operations			680,724			422,960			875,050
Share of other comprehensive income of investments accounted for using the equity method	10		77,447			30,429			54,353
Total other comprehensive income, net of tax	19		934,952			438,092			893,359
Comprehensive income for the year		¥	1,695,653		¥	1,155,401		¥	2,075,949
Comprehensive income for the year attributable to:
Owners of the parent			1,619,997			1,081,429			1,981,448
Non-controlling interests			75,656			73,972			94,501

See accompanying notes to consolidated financial statements.

F-10

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

Years ended March 31, 2022, 2023 and 2024

			Yen (millions)
			Equity attributable to owners of the parent
	Note		Common stock		Capital surplus			Treasury stock			Retained earnings			Other components of equity			Total			Non- controlling interests			Total equity
Balance as of April 1, 2021			¥	86,067	¥	172,049		¥	(273,786	)	¥	8,901,266		¥	196,710		¥	9,082,306		¥	290,533		¥	9,372,839
Comprehensive income for the year
Profit for the year												707,067						707,067			53,634			760,701
Other comprehensive income, net of tax		19													912,930			912,930			22,022			934,952
Total comprehensive income for the year												707,067			912,930			1,619,997			75,656			1,695,653
Reclassification to retained earnings		19										119,202			(119,202	)		—						—
Transactions with owners and other
Dividends paid		19										(188,402	)					(188,402	)		(45,131	)		(233,533	)
Purchases of treasury stock									(62,758	)								(62,758	)					(62,758	)
Disposal of treasury stock									578									578						578
Share-based payment transactions						(233	)											(233	)					(233	)
Equity transactions and others						13,679			7,657									21,336			(21,336	)		—
Total transactions with owners and other						13,446			(54,523	)		(188,402	)					(229,479	)		(66,467	)		(295,946	)
Balance as of March 31, 2022			¥	86,067	¥	185,495		¥	(328,309	)	¥	9,539,133		¥	990,438		¥	10,472,824		¥	299,722		¥	10,772,546
Comprehensive income for the year
Profit for the year												651,416						651,416			65,893			717,309
Other comprehensive income, net of tax		19													430,013			430,013			8,079			438,092
Total comprehensive income for the year												651,416			430,013			1,081,429			73,972			1,155,401
Reclassification to retained earnings		19										3,054			(3,054	)		—						—
Transactions with owners and other
Dividends paid		19										(213,475	)					(213,475	)		(51,601	)		(265,076	)
Purchases of treasury stock									(157,001	)								(157,001	)					(157,001	)
Disposal of treasury stock									379									379						379
Share-based payment transactions						94												94						94
Equity transactions and others																					(4,052	)		(4,052	)
Total transactions with owners and other						94			(156,622	)		(213,475	)					(370,003	)		(55,653	)		(425,656	)
Balance as of March 31, 2023			¥	86,067	¥	185,589		¥	(484,931	)	¥	9,980,128		¥	1,417,397		¥	11,184,250		¥	318,041		¥	11,502,291
Comprehensive income for the year
Profit for the year												1,107,174						1,107,174			75,416			1,182,590
Other comprehensive income, net of tax		19													874,274			874,274			19,085			893,359
Total comprehensive income for the year												1,107,174			874,274			1,981,448			94,501			2,075,949
Reclassification to retained earnings		19										(17,715	)		17,715			—						—
Transactions with owners and other
Dividends paid		19										(241,865	)					(241,865	)		(63,895	)		(305,760	)
Purchases of treasury stock									(250,513	)								(250,513	)					(250,513	)
Disposal of treasury stock									504									504						504
Cancellation of treasury stock						(623	)		184,132			(183,509	)					—						—
Share-based payment transactions						3												3						3
Equity transactions and others						20,104									3,064			23,168			(39,770	)		(16,602	)
Total transactions with owners and other						19,484			(65,877	)		(425,374	)		3,064			(468,703	)		(103,665	)		(572,368	)
Balance as of March 31, 2024			¥	86,067	¥	205,073		¥	(550,808	)	¥	10,644,213		¥	2,312,450		¥	12,696,995		¥	308,877		¥	13,005,872

See accompanying notes to consolidated financial statements.

F-11

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2022, 2023 and 2024

		Yen (millions)
	Note	2022			2023			2024
Cash flows from operating activities:
Profit before income taxes		¥	1,070,190		¥	879,565		¥	1,642,384
Depreciation, amortization and impairment losses excluding equipment on operating leases			611,063			721,630			794,366
Share of profit of investments accounted for using the equity method			(202,512	)		(117,445	)		(110,817	)
Finance income and finance costs, net			(56,352	)		(71,661	)		(141,250	)
Interest income and interest costs from financial services, net			(155,872	)		(146,461	)		(152,041	)
Changes in assets and liabilities
Trade receivables			(24,037	)		(155,924	)		(138,323	)
Inventories			(208,895	)		(171,467	)		(67,833	)
Trade payables			50,122			105,272			36,516
Accrued expenses			(68,811	)		42,122			157,582
Provisions and retirement benefit liabilities			(156,079	)		90,880			263,593
Receivables from financial services			509,741			(41,480	)		(1,454,357	)
Equipment on operating leases			171,600			768,070			12,661
Other assets and liabilities			28,981			218,369			58,325
Other, net			(19,782	)		(1,222	)		(48,219	)
Dividends received			193,555			244,902			158,092
Interest received			237,724			324,234			560,709
Interest paid			(97,884	)		(159,020	)		(283,447	)
Income taxes paid, net of refund			(203,130	)		(401,342	)		(540,663	)
Net cash provided by operating activities			1,679,622			2,129,022			747,278
Cash flows from investing activities:
Payments for additions to property, plant and equipment			(268,143	)		(475,048	)		(348,680	)
Payments for additions to and internally developed intangible assets			(181,083	)		(157,440	)		(259,985	)
Proceeds from sales of property, plant and equipment and intangible assets			27,108			16,206			14,418
Proceeds from sales of subsidiaries, net of cash and cash equivalents disposed of			—			740			(18,544	)
Payments for acquisitions of investments accounted for using the equity method			—			(23,826	)		(173,767	)
Payments for acquisitions of other financial assets			(488,631	)		(527,334	)		(282,076	)
Proceeds from sales and redemptions of other financial assets			534,693			488,642			201,367
Net cash used in investing activities			(376,056	)		(678,060	)		(867,267	)
Cash flows from financing activities:
Proceeds from short-term financing liabilities			7,487,724			9,127,333			10,020,736
Repayments of short-term financing liabilities			(7,960,144	)		(8,684,799	)		(10,045,118	)
Proceeds from long-term financing liabilities			2,002,823			971,067			3,654,964
Repayments of long-term financing liabilities			(1,761,561	)		(2,382,190	)		(2,056,083	)
Dividends paid to owners of the parent			(188,402	)		(213,475	)		(241,865	)
Dividends paid to non-controlling interests			(53,813	)		(51,376	)		(66,855	)
Purchases and sales of treasury stock, net			(62,180	)		(156,622	)		(250,009	)
Repayments of lease liabilities			(80,165	)		(78,297	)		(80,513	)
Other, net			—			—			(16,611	)
Net cash provided by (used in) financing activities			(615,718	)		(1,468,359	)		918,646
Effect of exchange rate changes on cash and cash equivalents			229,063			145,480			352,894
Net change in cash and cash equivalents			916,911			128,083			1,151,551
Cash and cash equivalents at beginning of year			2,758,020			3,674,931			3,803,014
Cash and cash equivalents at end of year	5	¥	3,674,931		¥	3,803,014		¥	4,954,565

See accompanying notes to consolidated financial statements.

F-12

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1) Reporting Entity

Honda Motor Co., Ltd. (the “Company”) is a public company domiciled in Japan. The Company and its subsidiaries (collectively “Honda”) develop, manufacture and distribute motorcycles, automobiles, power products and others throughout the world, and also provide financial services to customers and dealers for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, China, India, Indonesia, Malaysia, Thailand, Vietnam and Brazil.

(2) Basis of Preparation

(a) Compliance with International Financial Reporting Standards

The Company’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The term “IFRS” also includes International Accounting Standards (IASs) and the related interpretations of the interpretations committees (SIC and IFRIC).

(b) Basis of Measurement

The consolidated financial statements have been prepared on the historical cost basis, except for certain assets and liabilities separately stated in note 3.

(c) Functional Currency and Presentation Currency

The consolidated financial statements are presented in Japanese yen, which is the functional currency of the Company. All financial information presented in Japanese yen has been rounded to the nearest million Japanese yen, except when otherwise indicated.

(d) New Accounting Standards and Interpretations Not Yet Adopted

New or amended standards and interpretations that have been issued as of the date of approval of the consolidated financial statements but are not effective and have not yet been adopted by Honda as of March 31, 2024 are as follows.

Honda is currently evaluating the impact of adoption of this standard on the Company’s consolidated financial statements.

Standards and interpretations		Mandatory adoption (from fiscal years beginning on or after)	Reporting periods in which the Company is scheduled to adopt the standards	Overview of new or amended standards and interpretations
IFRS 18	Presentation and Disclosure in Financial Statements	January 1, 2027	To be determined	New standard which supersedes current standard of presentation and disclosure in financial statements

(e) Use of Estimates and Judgments

The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amount of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

F-13

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

These estimates and underlying assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about judgments that have been made in the process of applying accounting policies and that have significant effects on the amounts reported in the consolidated financial statements is as follows:

• Scope of subsidiaries, affiliates and joint ventures (notes 3(a) and 3(b))

• Recognition of intangible assets arising from development (note 3(h))

• Accounting for contracts including lease (note 3(i))

Information about accounting estimates and assumptions that have significant effects on the amounts reported in the consolidated financial statements is as follows:

• End of term residual values of operating lease vehicles (note 3(f))

• Valuation of financial assets measured at amortized cost and debt securities classified into financial assets measured at fair value through other comprehensive income (notes 6, 7 and 8)

• Fair value of financial instruments (note 26)

• Net realizable value of inventories (note 9)

• Recoverable amount of non-financial assets (notes 11, 12 and 13)

• Measurement of provisions (note 17)

• Measurement of net defined benefit liabilities (assets) (note 18)

• Recoverability of deferred tax assets (note 23)

• Likelihood and magnitude of outflows of resources embodying economic benefits required to settle contingent liabilities (note 28)

(3) Material Accounting Policies

(a) Basis of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiaries which are directly or indirectly controlled by the Company, and those structured entities which are controlled by Honda. All significant intercompany balances and transactions have been eliminated in consolidation.

Honda controls an entity when Honda is exposed or has rights to variable returns from involvement with the entity, and has the ability to affect those returns by using its power, which is the current ability to direct the relevant activities, over the entity. To determine whether or not Honda controls an entity, status of voting rights or similar rights, contractual agreements and other specific factors are taken into consideration.

Structured entities are entities designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Honda consolidates structured entities over which it has control, by comprehensively determining whether its control over the entity exists based on any contractual arrangements with such entity as well as the percentage of its voting or similar rights in the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date when the control is obtained until the date when the control is lost. The financial statements of subsidiaries have been adjusted in order to ensure consistency with the accounting policies adopted by the Company as necessary.

F-14

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Changes in the Company’s ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. When control over a subsidiary is lost, the investment retained after the loss of control is remeasured at fair value as of the date of the loss of control, and any gain or loss on such remeasurement and disposal of the interest sold is recognized in profit or loss.

(b) Investments in Affiliates and Joint Ventures (Investments Accounted for Using the Equity Method)

Affiliates are entities over which Honda has a significant influence over the decisions on financial and operating policies, but does not have control or joint control.

Joint ventures are joint arrangements whereby the parties including Honda that have joint control have rights to the net assets of the arrangement. Joint arrangements are arrangements of which two or more parties have joint control, and joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Investments in affiliates and joint ventures are accounted for using the equity method from the date when the investees are determined to be affiliates or joint ventures until the date when they ceased to be classified as affiliates or joint ventures. Under the equity method, the investment is initially recognized at cost, and the carrying amount is subsequently increased or decreased, to recognize Honda’s share of profit or loss and other comprehensive income of the affiliate or the joint venture after the date of initial recognition. The financial statements of affiliates and joint ventures have been adjusted in order to ensure consistency with the accounting policies adopted by the Company in applying the equity method, as necessary.

The use of the equity method is discontinued from the date when the investees are determined to be no longer affiliates or joint ventures. The investment retained after cessation of the equity method is remeasured at fair value, and any gain or loss on such remeasurement and disposal of the investment is recognized in profit or loss.

(c) Foreign Currency Translations

1) Foreign currency transactions

Foreign currency transactions are translated into the respective functional currencies at the exchange rates prevailing when such transactions occur. All foreign currency receivables and payables are translated into the respective functional currencies at the applicable exchange rates at the end of the reporting period. Gains or losses on exchange differences arising on settlement of foreign currency receivables and payables or on their translations at the end of the reporting date are recognized in profit or loss and they are included in finance income and finance costs-other, net in the consolidated statements of income.

2) Foreign operations

All assets and liabilities of foreign subsidiaries, affiliates and joint ventures (collectively “foreign operations”), which use a functional currency other than Japanese yen, are translated into Japanese yen at the exchange rates at the end of the reporting period. All revenues and expenses of foreign operations are translated into Japanese yen at the average exchange rate for the period except when a functional currency is the currency of a hyperinflationary economy. Exchange differences arising from translation are recognized in other comprehensive income and accumulated in other components of equity in the consolidated statements of financial position. When a foreign operation is disposed of, and control, significant influence or joint control over the foreign operation is lost, the cumulative amount of exchange differences relating to the foreign operation is reclassified from equity to profit or loss.

F-15

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(d) Financial Instruments

A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity security of another entity. When Honda becomes a party to the contractual provision of a financial instrument, the financial instrument is recognized either as a financial asset or as a financial liability. When Honda purchases or sells a financial asset, the financial asset is recognized or derecognized at the trade date.

1) Non-derivative financial assets

Honda classifies financial assets other than derivatives into “financial assets measured at amortized cost”, “financial assets measured at fair value through other comprehensive income” or “financial assets measured at fair value through profit or loss”. Honda determines the classification of financial assets upon initial recognition.

Financial assets are derecognized when the contractual rights to cash flows from the financial assets expire, or when the contractual rights to receive the cash flows from the financial assets are transferred and all risks and rewards of ownership of the financial assets are substantially transferred.

Financial assets measured at amortized cost

A financial asset is classified into financial assets measured at amortized cost when the asset is held within a business model whose objective is to hold the asset in order to collect the contractual cash flows, and the contractual term of the financial asset gives rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets measured at amortized cost except trade receivables arising from contracts with customers are initially measured at their fair value and trade receivables arising from contracts with customers are initially measured at their transaction price. Financial assets measured at amortized cost are subsequently measured at amortized cost using the effective interest method.

Financial assets measured at fair value

A financial asset other than a financial asset measured at amortized cost is classified into financial assets measured at fair value. The financial assets measured at fair value are further classified into the following categories:

Financial assets measured at fair value through other comprehensive income

A debt security is classified into financial assets measured at fair value through other comprehensive income when the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The debt securities are initially measured at their fair value, and subsequent changes in fair value are recognized in other comprehensive income except for impairment gain or loss and foreign exchange gain or loss. When the debt securities are derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Honda elects to designate investments in equity securities such as shares, held for maintaining and strengthening the trade relationship as financial assets measured at fair value through other comprehensive income. Equity securities designated as financial assets measured at fair value through other comprehensive income are initially measured at their fair value, and subsequent changes in fair value of the investment are

F-16

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

recognized in other comprehensive income. However, dividends from the equity securities are principally recognized in profit or loss. When the equity securities are derecognized, the cumulative gain or loss previously recognized in other comprehensive income is directly reclassified to retained earnings.

Financial assets measured at fair value through profit or loss

Financial assets measured at fair value other than financial assets measured at fair value through other comprehensive income are classified into financial assets measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are initially measured at their fair value, and subsequent changes in fair value are recognized in profit or loss.

(Cash and cash equivalents)

Cash and cash equivalents consist of cash on hand, demand deposits, and short-term highly liquid investments that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Honda includes all highly liquid debt instruments with original maturities of three months or less in cash equivalents.

2) Non-derivative financial liabilities

Financial liabilities other than derivatives are initially measured at their fair value, and are subsequently measured at amortized cost using the effective interest method.

Financial liabilities are derecognized, when the obligations specified in the contract are discharged, canceled or expire.

3) Derivatives

Honda has entered into foreign exchange and interest rate agreements to manage currency and interest rate exposures. These agreements include foreign currency forward exchange contracts, currency option contracts, currency swap agreements and interest rate swap agreements.

All these derivatives are initially recognized as assets or liabilities and measured at fair value, when Honda becomes a party to the contractual provision of the derivatives. Subsequent changes in fair value of derivatives are recognized in profit or loss in the period of the changes.

Honda has not held any derivatives designated as hedging instruments for the years ended March 31, 2022, 2023 and 2024.

4) Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount is presented in the consolidated statements of financial position, only when Honda currently has a legally enforceable right to offset the recognized amounts, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 

F-17

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(e) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes purchase costs and conversion costs, and it is determined principally by using the first-in first-out method. Conversion cost includes an appropriate share of production overheads on the normal operation capacity. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(f) Equipment on Operating Leases

Equipment on operating leases is measured based on the cost model and carried at its cost less accumulated depreciation and impairment losses.

A vehicle subject to operating lease is initially measured at its cost. Depreciation of equipment on operating leases is calculated on the straight-line method over the lease term. The depreciable amount is the cost of the vehicle less its residual value.

Our most significant finance subsidiary located in the United States determines contractual residual values of operating lease vehicles at lease inception based on expectations of used vehicle values at the end of their lease term. The finance subsidiary in the United States depreciates operating lease vehicles on a straight-line basis over the lease term to the lower of contract residual values or estimated end of term residual values. The finance subsidiary in the United States assesses its estimates for end of term residual values of lease vehicles, at minimum, on a quarterly basis. Adjustments to estimated residual values are made on a straight-line basis over the remaining term of the lease and are recognized as depreciation expense. Lease customers have the option at the end of the lease term to return the vehicle to the dealer or to buy the vehicle for the contractual residual value (or if purchased prior to lease maturity, for the outstanding contractual balance). Returned lease vehicles can be purchased by the grounding dealer for the contractual residual value (or if purchased prior to lease maturity, for the outstanding contractual balance) or a market based price. Returned lease vehicles that are not purchased by the grounding dealers are sold through online and physical auctions.

Estimated end of term residual values are dependent on the percentage of leased vehicles expected to be returned by lessees and the expected market values of leased vehicles at the end of their lease terms. Factors considered in this evaluation include, among other factors, economic conditions, external market information on new and used vehicles, historical trends, and recent auction values.

(g) Property, Plant and Equipment

Property, plant and equipment is measured based on the cost model and carried at its cost less accumulated depreciation and impairment losses.

Property, plant and equipment is initially measured at its cost. Subsequent expenditures on an item of property, plant and equipment acquired, are recognized in the carrying amount of the item, only when it is probable that the expenditure will generate a future economic benefit.

Depreciation of property, plant and equipment, except for land that is not subject to depreciation, is calculated on the straight-line method over the estimated useful life. The depreciable amount is the cost of the asset less the respective estimated residual values. 

F-18

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The estimated useful lives used in calculating depreciation of property, plant and equipment are mainly as follows:

• Buildings and structures: 3 to 50 years

• Machinery and equipment: 2 to 20 years

The depreciation method, useful lives and residual values of property, plant and equipment are reviewed annually at each fiscal year end, and adjusted prospectively, if appropriate.

Property, plant and equipment in the consolidated statements of financial position includes right-of-use assets under lease arrangements. For the accounting for the right-of-use assets, see note “(3) Material Accounting Policies (i) Lease.”

(h) Intangible Assets

Intangible assets are measured based on the cost model and carried at their cost less accumulated amortization and impairment losses.

(Research and development)

Development expenditure for a product is capitalized only when there is a technical and commercial feasibility of completing the development, Honda has intention, ability and sufficient resources to use the outcome of the development, it is probable that the outcome will generate a future economic benefit, and the cost can be measured reliably.

Capitalized development cost is measured at the sum of expenditures for development incurred between when the foregoing conditions for capitalization are initially met and when the development is completed, and includes all directly attributable costs to the development process. Capitalized development cost is amortized using the straight-line method over the expected product life cycle of the developed product ranging mainly from 2 to 6 years.

Expenditures on research and other development expenditures which do not meet the foregoing conditions are expensed as incurred.

(Other intangible asset)

Other intangible assets are initially measured at cost and principally amortized using the straight-line method over their estimated useful lives. Other intangible assets are mainly comprised of software for internal use whose estimated useful lives range from 3 to 5 years.

The amortization method and useful lives of intangible assets are reviewed annually at each fiscal year end, and adjusted prospectively, if appropriate.

(i) Lease

At inception of a contract, Honda assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. When Honda has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use and the right to direct the use of the identified asset, the contract conveys the right to control the use of the identified asset.

F-19

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

1) Lease as a lessee

A right-of-use asset and a lease liability are recognized at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the amount of initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date, any initial direct costs incurred by the lessee and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset. For a contract that contains a lease component and non-lease components, Honda has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The right-of-use asset is measured based on the cost model and carried at its cost less accumulated depreciation and impairment losses. After the initial recognition, depreciation of the right-of-use asset is subsequently calculated on the straight-line method from the commencement date to the earlier of the end of the useful life of the underlying asset or the end of the lease term. The estimated useful lives of underlying assets, see note “(3) Material Accounting Policies (g) Property, Plant and Equipment.”

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Honda’s incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise mainly the fixed payments (including the lease payments in an optional renewal period if Honda is reasonably certain to exercise the extension option) and the penalties for termination of a lease unless Honda is reasonably certain not to terminate early.

After the initial recognition, the lease liability is measured by increasing the carrying amount to reflect interest that produces a constant periodic rate of interest on the remaining balance of the lease liability and reducing the carrying amount to reflect the lease payments. The lease liability is remeasured if Honda changes its assessment of whether it will exercise an extension or termination option.

When the lease liability is remeasured, the amount of the remeasurement of the lease liability is recognized as an adjustment to the right-of-use asset. However, if the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, any remaining amount of the remeasurement is recognized in profit or loss.

2) Lease as a lessor

For a contract that is, or contains a lease, the lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset and the lease other than finance lease is classified as an operating lease.

Honda assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.

The finance subsidiaries of the Company engage in the business of leasing vehicles as a lessor. A receivable from customer held under a finance lease is initially recognized at the amount of net investment in the lease which is the gross investment in the lease discounted at the interest rate implicit in the lease, and included in receivables from financial services in the consolidated statements of financial position. Vehicles subject to operating leases are presented as equipment on operating leases in the consolidated statements of financial position.

If a contract contains lease and non-lease components, Honda applies IFRS 15 to allocate the consideration in the contract.

F-20

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(j) Impairment

1) Financial assets measured at amortized cost and debt securities classified into financial assets measured at fair value through other comprehensive income

The allowance for impairment losses of financial assets measured at amortized cost other than trade receivables and debt securities classified into financial assets measured at fair value through other comprehensive income is measured at amounts according to the three-stage expected credit loss (ECL) model:

Stage 1 12-month ECL for financial assets without a significant increase in credit risk since initial recognition

Stage 2 Lifetime ECL for financial assets with a significant increase in credit risk since initial recognition but that are not credit-impaired

Stage 3 Lifetime ECL for credit-impaired financial assets

The allowance for impairment losses of trade receivables is continuously measured at amounts equal to lifetime ECL.

Lifetime ECL represents ECL that results from all possible default events over the expected life of a financial asset. 12-month ECL is the portion of lifetime ECL that results from default events that are possible within 12 months after the reporting date. ECL is a probability-weighted estimate of the difference between the contractual cash flows and the cash flows that the entity expects to receive, discounted at the original effective interest rates.

Receivables from financial services – Allowance for credit losses

The allowance for credit losses is management’s estimate of expected credit loss on receivables from financial services.

To determine whether credit risk has increased significantly, consumer finance receivables are assessed both individually and collectively. Individual assessments are based on delinquencies. Consumer finance receivables 30 days or greater past due have historically experienced increased default rates and therefore are considered to have a significant increase in credit risk. Collective assessments are performed for groups of consumer finance receivables with shared risk characteristics such as the period of initial recognition, collateral type, original term, and credit score considering relative changes in expected default rates since initial recognition. Dealer finance receivables are assessed at the individual dealership level to determine whether credit risk has increased significantly considering payment performance and other factors such as changes in the financial condition of the dealership and compliance with debt covenants.

Our definition of default on receivables from financial services varies depending on internal risk management practices of each of our finance subsidiaries. Our most significant finance subsidiary located in the United States considers delinquencies of 60 days past due to be in default. Collection efforts on consumer finance receivables are escalated after becoming 60 days past due including repossession of the underlying vehicles if it has been determined that the borrower is unable to perform on their obligations. Defaulted consumer finance receivables are considered to be credit-impaired. Dealer finance receivables are considered to be credit-impaired when there is evidence we will be unable to collect all amounts due in accordance with the original contractual terms including significant financial difficulty of the dealership, a breach of contract, such as a default or delinquency, or bankruptcy.

F-21

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

At the finance subsidiary in the United States, the estimated uncollectible portion of consumer finance receivables are written-off at 120 days past due or upon repossession of the underlying vehicle. Although various statutory regulations limit the length of time and circumstances when enforcement activities can be taken, in general, the outstanding contractual balances continue to be subject to enforcement activities for several years after write-offs. The portion of outstanding contractual balances that is estimated to be uncollectible reflects our expectations of collections from enforcement activities. Dealer finance receivables are written-off when there is no reasonable expectation of recovery.

At the finance subsidiary in the United States, ECL of consumer finance receivables is measured for groups of financial assets with shared risk characteristics by reflecting historical results, current conditions and forward-looking factors such as unemployment rates, used vehicles prices, and consumer debt service burdens.

2) Non-financial assets and investments accounted for using the equity method

At the end of the reporting period, the carrying amount of non-financial assets other than inventories and deferred tax assets (which are comprised mainly of equipment on operating leases, property, plant and equipment, and intangible assets) is assessed to determine whether or not there is any indication of impairment. If there is such an indication, the recoverable amount of such asset is estimated and compared with the carrying amount of the asset, as test of impairment.

For investments accounted for using the equity method, the entire carrying amount of each investment in affiliates and joint ventures is tested for impairment as a single asset, when there is objective evidence that the investments accounted for using the equity method may be impaired.

The recoverable amount of an individual asset or a cash-generating unit is the higher of fair value less costs to sell and value in use. Value in use is determined as the present value of future cash flows expected to be derived from an asset or a cash-generating unit. A cash-generating unit is determined as the smallest identifiable group of assets that generate cash inflows which are largely independent of cash inflows from other assets or a group of assets. When it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is estimated.

When the carrying amount of an asset or a cash-generating unit exceeds the recoverable amount, the carrying amount is reduced to the recoverable amount and an impairment loss is recognized in profit or loss. An impairment loss for a cash-generating unit is allocated to the assets on the basis of the relative carrying amount of each asset in the unit.

An impairment loss recognized for an asset or a cash-generating unit in prior period is reversed, if there is any indication that the impairment loss may have decreased or may no longer exist, and when the recoverable amount of the asset exceeds the carrying amount. If this is the case, the carrying amount of the asset is increased to its recoverable amount, but the increased carrying amount does not exceed the carrying amount (net of depreciation or amortization) calculated on the basis that no impairment loss had occurred in the prior period.

(k) Provisions

Provisions are recognized when Honda has present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Provisions are measured based on the best estimate of expenditure required to settle the present obligation at the end of the reporting period. Where the effect of the time value of money is material, a provision is measured

F-22

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

at the present value of the expenditures required to settle the obligation. In calculating the present value, a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the liability is used as the discount rate.

(l) Employee Benefits

1) Short-term employee benefits

For short-term employee benefits including salaries, bonuses and paid annual leave, when the employees render related services, the amounts expected to be paid in exchange for those services are recognized as expenses.

2) Post-employment benefits

Honda has various post-employment benefit plans including defined benefit plans and defined contribution plans.

Defined benefit plans

For defined benefit plans, the present value of defined benefit obligations less the fair value of plan assets is recognized as either liability or asset in the consolidated statements of financial position. In the case that an entity has a surplus in a defined benefit plan, the recognized asset is limited to present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

The present value of defined benefit obligations and service cost are principally determined for each plan using the projected unit credit method. The discount rate is determined by reference to market yields at the end of the reporting period on high quality corporate bonds that are consistent with the currency and estimated term of the post-employment benefit obligation. Net interest on the net defined benefit liability (asset) for the reporting period is determined by multiplying the net defined benefit liability (asset) by the discount rate.

Past service cost defined as the change in the present value of the defined benefit obligation resulting from a plan amendment or curtailment is recognized in profit or loss upon occurrence of the plan amendment or curtailment.

Honda recognizes the difference arising from remeasurement of present value of the defined benefit obligations and the fair value of the plan assets in other comprehensive income when it is incurred, and reclassifies it immediately to retained earnings.

Defined contribution plans

For defined contribution plans, when the employees render related services, the contribution payables to defined contribution plan are recognized as expenses.

(m) Equity

1) Common share

Common share issued by the Company is classified as equity, and the proceeds from issuance of common share are included in common stock and capital surplus.

F-23

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

2) Treasury stock

Treasury stock acquired by Honda is recognized at cost and deducted from equity. When treasury stock is sold, the consideration received is recognized as equity with the difference between the carrying amount and the consideration received included in capital surplus.

(n) Revenue Recognition

1) Sale of products

Sales of products are reported by Motorcycle business, Automobile business, Power products and other businesses. For details of the information on each business, see note 4.

Honda recognizes revenue when control over products is transferred to customers. This transfer generally corresponds to the date of delivery of products to customers. Revenue is measured based on consideration specified in a contract with customer and excludes amounts collected on behalf of third parties. The total consideration in the contract is allocated to all products and services based on their stand-alone selling prices. The stand-alone selling prices are determined with reference to the selling prices of similar products or services and other reasonably available information.

Honda provides dealer incentives, which generally represent discounts provided from Honda to the dealer. Honda also provides incentive programs generally in the form of below-market interest rate loans or lease programs for the retail customers to enhance dealer’s sales activities. The amount incurred for these programs is calculated based on the difference between the interest or lease rate offered to retail customers and the market-based interest or lease rate. These incentives are considered variable consideration when determining the transaction price and they are deducted from sales revenue recognized when products are sold to the dealers. Sales revenue is recognized only to the extent that it is highly probable that a significant reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Customers usually pay consideration for sales of products within 30 days from the transfers of control over the products to customers.

In addition, product sales contracts with customers include warranty clauses to guarantee that the products comply with agreed-upon specifications and Honda recognizes provisions for product warranties to meet these guarantees. For more information on product warranties, see note 17.

2) Rendering of financial services

Interest income from receivables from financial services is recognized using the effective interest method. Finance receivable origination fees and certain direct origination costs are included in the calculation of the effective interest rate, and the net fee or cost is amortized using the effective interest method over the contractual term of the finance receivables.

The finance subsidiaries of the Company offer financial services that contain a lease. Interest income from receivables held under a finance lease is recognized using the effective interest method. When Honda is the manufacturer or dealer lessor, sales revenue and the corresponding cost for a portion identified as sale of products is recognized in profit or loss in accordance with the policy on revenue recognition for sale of products. Revenue from operating leases is recognized on a straight-line basis over the term of the lease.

F-24

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(o) Income Taxes

Income tax expenses are presented as the aggregate amount of current taxes and deferred taxes. Current taxes and deferred taxes are recognized in profit or loss, except for the tax arising from a transaction which is recognized either in other comprehensive income or directly in equity.

Current taxes are measured at the amount expected to be paid to (or recovered from) the taxation authorities in respect of the taxable profit (or tax loss) for the reporting period, using the tax rates and tax laws enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the carrying amount of assets or liabilities in the consolidated statements of financial position and the tax base of the assets or liabilities and carryforward of unused tax losses and tax credits. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses, and unused tax credits can be utilized.

Deferred tax liabilities for taxable temporary differences related to investments in subsidiaries and affiliates, and interest in joint ventures are not recognized to the extent that Honda is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future. Deferred tax assets for deductible temporary differences arising from investments in subsidiaries and affiliates, and interest in joint ventures are recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which they can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the assets are realized or the liabilities are settled, based on the tax rates and tax laws enacted or substantively enacted at the end of the reporting period. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which Honda expects, at the end of reporting period, to recover or settle the carrying amount of its assets and liabilities.

Honda reviews the carrying amount of deferred tax assets at the end of each reporting period, and reduces the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax assets to be utilized.

Deferred tax assets and deferred tax liabilities are offset, only when Honda has a legally enforceable right to set off current tax assets against current tax liabilities, and the same taxation authority levies income taxes either on the same taxable entity or on different taxable entity which intends either to settle current tax liabilities and assets on a net basis or to realize the assets and settle the liabilities simultaneously.

Honda reflects the effect of uncertainty in the consolidated financial statements if Honda concludes it is not probable that the taxation authority will accept the tax treatment.

Honda has adopted amendments to IAS 12 “International Tax Reform—Pillar Two Model Rules” issued on May 23, 2023, and has neither recognized nor disclosed information about deferred tax assets and liabilities related to the income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules published by the Organisation for Economic Co-operation and Development(OECD), including tax law that implements qualified domestic minimum top-up taxes described in those rules.

(p) Earnings per Share

Basic earnings per share is calculated by dividing profit for the year attributable to owners of the parent by the weighted average number of common shares outstanding during the period.

F-25

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(4) Segment Information

Based on Honda’s organizational structure and characteristics of products and services, Honda discloses segment information in four categories: Reportable segments of Motorcycle business, Automobile business and Financial services business, and other segments that are not reportable. The other segments are combined and disclosed in Power products and other businesses. Segment information is based on the components of Honda for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting policies used for segment information are consistent with the accounting policies used in the Company’s consolidated financial statements.

Principal products and services, and functions of each segment are as follows:

Segment	Principal products and services	Functions
Motorcycle Business	Motorcycles, all-terrain vehicles (ATVs), side-by-sides (SxS) and relevant parts	Research and development Manufacturing Sales and related services
Automobile Business	Automobiles and relevant parts	Research and development Manufacturing Sales and related services
Financial Services Business	Financial services	Retail loan and lease related to Honda products Others
Power Products and Other Businesses	Power products and relevant parts, and others	Research and development Manufacturing Sales and related services Others

F-26

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(a) Segment Information

Segment information as of and for the years ended March 31, 2022, 2023 and 2024 is as follows:

As of and for the year ended March 31, 2022

	Yen (millions)
	Motorcycle Business			Automobile Business		Financial Services Business		Power Products and Other Businesses			Segment Total		Reconciling Items			Consolidated
Sales revenue:
External customers	¥	2,185,253		¥	9,147,498	¥	2,820,667	¥	399,278		¥	14,552,696	¥	—		¥	14,552,696
Intersegment		—			213,095		2,656		22,480			238,231		(238,231	)		—
Total		2,185,253			9,360,593		2,823,323		421,758			14,790,927		(238,231	)		14,552,696
Segment profit (loss)	¥	311,492		¥	236,207	¥	333,032	¥	(9,499	)	¥	871,232	¥	—		¥	871,232
Share of profit of investments accounted for using the equity method	¥	33,510		¥	168,415	¥	—	¥	587		¥	202,512	¥	—		¥	202,512
Segment assets		1,448,926			9,563,553		11,318,756		475,124			22,806,359		1,166,794			23,973,153
Investments accounted for using the equity method		104,535			855,309		—		7,560			967,404		—			967,404
Depreciation and amortization		65,423			510,755		883,712		17,018			1,476,908		—			1,476,908
Capital expenditures		49,203			410,169		2,028,700		15,748			2,503,820		—			2,503,820
Impairment losses on non-financial assets		(23	)		13,097		1,874		276			15,224		—			15,224
Provision (reversal) for credit and lease residual losses on receivables from financial services		—			—		9,282		—			9,282		—			9,282

As of and for the year ended March 31, 2023

	Yen (millions)
	Motorcycle Business		Automobile Business			Financial Services Business		Power Products and Other Businesses		Segment Total		Reconciling Items			Consolidated
Sales revenue:
External customers	¥	2,908,983	¥	10,593,519		¥	2,954,098	¥	451,125	¥	16,907,725	¥	—		¥	16,907,725
Intersegment		—		188,198			2,046		25,307		215,551		(215,551	)		—
Total		2,908,983		10,781,717			2,956,144		476,432		17,123,276		(215,551	)		16,907,725
Segment profit (loss)	¥	488,709	¥	(16,629	)	¥	285,857	¥	22,832	¥	780,769	¥	—		¥	780,769
Share of profit of investments accounted for using the equity method	¥	49,119	¥	66,973		¥	—	¥	1,353	¥	117,445	¥	—		¥	117,445
Segment assets		1,580,521		10,082,519			11,197,017		480,166		23,340,223		1,329,844			24,670,067
Investments accounted for using the equity method		110,665		795,973			—		9,308		915,946		—			915,946
Depreciation and amortization		65,746		600,617			908,942		21,571		1,596,876		—			1,596,876
Capital expenditures		59,101		613,351			1,546,683		14,386		2,233,521		—			2,233,521
Impairment losses on non-financial assets		4,662		24,777			5,259		91		34,789		—			34,789
Provision (reversal) for credit and lease residual losses on receivables from financial services		—		—			27,018		—		27,018		—			27,018

F-27

As of and for the year ended March 31, 2024

	Yen (millions)
	Motorcycle Business		Automobile Business		Financial Services Business		Power Products and Other Businesses			Segment Total		Reconciling Items			Consolidated
Sales revenue:
External customers	¥	3,220,168	¥	13,567,565	¥	3,248,808	¥	392,261		¥	20,428,802	¥	—		¥	20,428,802
Intersegment		—		223,950		2,976		30,068			256,994		(256,994	)		—
Total		3,220,168		13,791,515		3,251,784		422,329			20,685,796		(256,994	)		20,428,802
Segment profit (loss)	¥	556,232	¥	560,649	¥	273,978	¥	(8,882	)	¥	1,381,977	¥	—		¥	1,381,977
Share of profit of investments accounted for using the equity method	¥	53,843	¥	55,392	¥	—	¥	1,582		¥	110,817	¥	—		¥	110,817
Segment assets		2,047,270		11,690,446		14,118,371		585,301			28,441,388		1,332,762			29,774,150
Investments accounted for using the equity method		119,598		1,076,481		—		10,889			1,206,968		—			1,206,968
Depreciation and amortization		72,590		655,250		834,246		17,400			1,579,486		—			1,579,486
Capital expenditures		74,006		598,475		2,451,930		16,768			3,141,179		—			3,141,179
Impairment losses on non-financial assets		33		44,652		14,646		61			59,392		—			59,392
Provision (reversal) for credit and lease residual losses on receivables from financial services		—		—		50,057		—			50,057		—			50,057

Explanatory notes:

1. Segment profit (loss) of each segment is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs. Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable.

2. Segment assets of each segment are defined as total assets including investments accounted for using the equity method, derivatives, and deferred tax assets. Segment assets are based on those directly associated with each segment and those not directly associated with specific segments are allocated based on the most reasonable measures applicable except for the corporate assets described below.

3. Intersegment sales revenues are generally made at values that approximate arm’s-length prices.

4. Reconciling items include elimination of intersegment transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of March 31, 2022, 2023 and 2024 amounted to ¥1,319,995 million, ¥1,462,656 million and ¥1,573,834 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

5. Provisions for product warranties accrued for the years ended March 31, 2022, 2023 and 2024 are ¥118,378 million, ¥289,850 million and ¥536,590 million, respectively. These are mainly included in Automobile business.

6. The amounts of write-down of inventories recognized as an expense for the years ended March 31, 2022, 2023 and 2024 are ¥11,295 million, ¥8,400 million and ¥12,220 million respectively. These are related to Automobile business and aircraft and aircraft engines, which are included in Power products and other businesses.

7. Right-of-use assets are not included in Capital expenditures.

F-28

(b) Product or Service Groups Information

Sales revenue by product or service groups of Honda for the years ended March 31, 2022, 2023 and 2024 is as follows:

	Yen (millions)
	2022		2023		2024
Motorcycles, all-terrain vehicles (ATVs), side-by-sides (SxS) and relevant parts	¥	2,185,253	¥	2,908,983	¥	3,220,168
Automobiles and relevant parts		10,582,764		12,093,972		15,227,546
Financial services		1,385,401		1,453,645		1,588,827
Power products and relevant parts		294,577		360,385		292,563
Others		104,701		90,740		99,698
Total	¥	14,552,696	¥	16,907,725	¥	20,428,802

(c) Geographical Information

The sales revenue and carrying amounts of non-current assets other than financial instruments, deferred tax assets and net defined benefit assets based on the location of the Company and its subsidiaries as of and for the years ended March 31, 2022, 2023 and 2024 are as follows:

As of and for the year ended March 31, 2022

	Yen (millions)
	Japan		United States		Other Countries		Total
Sales revenue	¥	2,354,532	¥	6,728,800	¥	5,469,364	¥	14,552,696
Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets	¥	3,036,832	¥	4,490,562	¥	1,768,697	¥	9,296,091

As of and for the year ended March 31, 2023

	Yen (millions)
	Japan		United States		Other Countries		Total
Sales revenue	¥	2,409,584	¥	7,905,936	¥	6,592,205	¥	16,907,725
Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets	¥	2,937,148	¥	4,373,329	¥	1,728,475	¥	9,038,952

As of and for the year ended March 31, 2024

	Yen (millions)
	Japan		United States		Other Countries		Total
Sales revenue	¥	2,634,505	¥	10,343,985	¥	7,450,312	¥	20,428,802
Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets	¥	3,054,330	¥	4,914,193	¥	1,822,125	¥	9,790,648

F-29

(5) Cash and Cash Equivalents

Cash and cash equivalents as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023		2024
Cash and deposits	¥	2,822,949	¥	3,381,610
Cash equivalents		980,065		1,572,955
Total	¥	3,803,014	¥	4,954,565

Cash equivalents held by Honda mainly consist of money market funds and certificates of deposit.

(6) Trade Receivables

Trade receivables are classified as financial assets measured at amortized cost.

Trade receivables as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023			2024
Trade accounts and notes receivable	¥	900,312		¥	986,390
Other		168,579			262,102
Allowance for impairment losses		(8,620	)		(8,402	)
Total	¥	1,060,271		¥	1,240,090

The changes in the allowance for impairment losses on trade receivables for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Yen (millions)
	2022			2023			2024
Balance at beginning of year	¥	10,521		¥	8,845		¥	8,620
Remeasurement	¥	260		¥	297		¥	274
Write-offs		(2,648	)		(757	)		(1,114	)
Exchange differences on translating foreign operations		712			235			622
Balance at end of year	¥	8,845		¥	8,620		¥	8,402

(7) Receivables from Financial Services

The finance subsidiaries of the Company provide various financial services to customers and dealers in order to support the sale of products. These receivables from financial services are categorized as follows:

Consumer finance receivables:

Retail receivables primarily consist of receivables from installment contracts with customers.

Finance lease receivables primarily consist of receivables from non-cancelable auto leases with customers.

Dealer finance receivables:

Wholesale receivables primarily consist of financing receivables from dealers for the purchase of inventories and dealer loans.

Receivables from financial services are mainly classified into financial assets measured at amortized cost.

F-30

Receivables from financial services as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023			2024
Consumer finance receivables:
Retail	¥	5,363,260		¥	7,330,459
Finance lease		174,256			230,139
Dealer finance receivables:
Wholesale		421,166			707,035
Subtotal	¥	5,958,682		¥	8,267,633
Allowance for credit losses	¥	(48,652	)	¥	(68,999	)
Unearned interest income and fees		(15,278	)		(23,364	)
Total	¥	5,894,752		¥	8,175,270
Current assets	¥	1,899,493		¥	2,558,594
Non-current assets		3,995,259			5,616,676
Total	¥	5,894,752		¥	8,175,270

Finance lease receivables

The lease payments receivable under the finance leases by maturity as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023			2024
Within 1 year	¥	32,525		¥	36,880
Between 1 and 2 years		33,924			42,831
Between 2 and 3 years		20,381			26,085
Between 3 and 4 years		13,497			18,064
Between 4 and 5 years		4,020			6,150
Later than 5 years		5,008			8,414
Undiscounted lease payments receivable	¥	109,355		¥	138,424
Unearned finance income	¥	(8,417	)	¥	(12,134	)
Unguaranteed residual value	¥	58,040		¥	80,485
Net investment in the lease	¥	158,978		¥	206,775

For the nature of the lessor’s leasing activities and the risk management strategy, see note 3(i) and (j).

F-31

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Allowance for credit losses

The changes in the allowance for credit losses on receivables from financial services for the years ended March 31, 2022, 2023 and 2024 are as follows:

For the years ended March 31, 2022, 2023 and 2024

	Yen (millions)
	12-month ECL (Stage 1)			Lifetime ECL						Total
				Not credit-impaired (Stage 2)			Credit-impaired (Stage 3)
Retail:
Balance as of April 1, 2021	¥	23,480		¥	5,923		¥	4,883		¥	34,286
Remeasurement	¥	(2,513	)	¥	(925	)	¥	13,701		¥	10,263
Write-offs		—			—			(12,256	)		(12,256	)
Exchange differences on translating foreign operations		2,822			516			1,136			4,474
Balance as of March 31, 2022	¥	23,789		¥	5,514		¥	7,464		¥	36,767
Remeasurement	¥	868		¥	5,288		¥	20,673		¥	26,829
Write-offs		—			—			(19,942	)		(19,942	)
Exchange differences on translating foreign operations		1,810			270			349			2,429
Balance as of March 31, 2023	¥	26,467		¥	11,072		¥	8,544		¥	46,083
Remeasurement	¥	6,823		¥	1,732		¥	40,899		¥	49,454
Write-offs		—			—			(36,663	)		(36,663	)
Exchange differences on translating foreign operations		3,849			1,474			1,282			6,605
Balance as of March 31, 2024	¥	37,139		¥	14,278		¥	14,062		¥	65,479
Finance lease:
Balance as of April 1, 2021	¥	470		¥	184		¥	159		¥	813
Remeasurement	¥	(339	)	¥	(98	)	¥	182		¥	(255	)
Write-offs		—			—			(97	)		(97	)
Exchange differences on translating foreign operations		8			6			12			26
Balance as of March 31, 2022	¥	139		¥	92		¥	256		¥	487
Remeasurement	¥	49		¥	(28	)	¥	(24	)	¥	(3	)
Write-offs		—			—			(35	)		(35	)
Exchange differences on translating foreign operations		4			5			7			16
Balance as of March 31, 2023	¥	192		¥	69		¥	204		¥	465
Remeasurement	¥	46		¥	15		¥	16		¥	77
Write-offs		—			—			(43	)		(43	)
Exchange differences on translating foreign operations		17			10			29			56
Balance as of March 31, 2024	¥	255		¥	94		¥	206		¥	555

F-32

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

	Yen (millions)
	12-month ECL (Stage 1)			Lifetime ECL						Total
				Not credit-impaired (Stage 2)			Credit-impaired (Stage 3)
Wholesale:
Balance as of April 1, 2021	¥	1,741		¥	62		¥	464		¥	2,267
Remeasurement	¥	(649	)	¥	(46	)	¥	(31	)	¥	(726	)
Write-offs		—			—			30			30
Exchange differences on translating foreign operations		84			1			153			238
Balance as of March 31, 2022	¥	1,176		¥	17		¥	616		¥	1,809
Remeasurement	¥	(263	)	¥	(8	)	¥	463		¥	192
Write-offs		—			—			33			33
Exchange differences on translating foreign operations		63			1			6			70
Balance as of March 31, 2023	¥	976		¥	10		¥	1,118		¥	2,104
Remeasurement	¥	377		¥	49		¥	100		¥	526
Write-offs		—			—			6			6
Exchange differences on translating foreign operations		149			3			177			329
Balance as of March 31, 2024	¥	1,502		¥	62		¥	1,401		¥	2,965
Total:
Balance as of April 1, 2021	¥	25,691		¥	6,169		¥	5,506		¥	37,366
Remeasurement	¥	(3,501	)	¥	(1,069	)	¥	13,852		¥	9,282
Write-offs		—			—			(12,323	)		(12,323	)
Exchange differences on translating foreign operations		2,914			523			1,301			4,738
Balance as of March 31, 2022	¥	25,104		¥	5,623		¥	8,336		¥	39,063
Remeasurement	¥	654		¥	5,252		¥	21,112		¥	27,018
Write-offs		—			—			(19,944	)		(19,944	)
Exchange differences on translating foreign operations		1,877			276			362			2,515
Balance as of March 31, 2023	¥	27,635		¥	11,151		¥	9,866		¥	48,652
Remeasurement	¥	7,246		¥	1,796		¥	41,015		¥	50,057
Write-offs		—			—			(36,700	)		(36,700	)
Exchange differences on translating foreign operations		4,015			1,487			1,488			6,990
Balance as of March 31, 2024	¥	38,896		¥	14,434		¥	15,669		¥	68,999

For more information on allowance for credit losses, see note 25(c).

F-33

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(8) Other Financial Assets

Other financial assets as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023			2024
Financial assets measured at amortized cost:
Receivables other than trade receivables and receivables from financial services	¥	164,503		¥	123,359
Debt securities		85,235			69,751
Guaranty deposits		12,689			13,662
Restricted cash		65,723			118,129
Other		4,167			4,422
Allowance for impairment losses		(2,988	)		(2,748	)
Financial assets measured at fair value through other comprehensive income:
Debt securities		26,555			30,567
Equity securities		475,138			522,703
Financial assets measured at fair value through profit or loss:
Derivatives		185,968			194,187
Debt securities		101,972			123,693
Total	¥	1,118,962		¥	1,197,725
Current assets	¥	263,892		¥	229,583
Non-current assets		855,070			968,142
Total	¥	1,118,962		¥	1,197,725

The changes in the allowance for impairment losses on other financial assets for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Yen (millions)
	2022			2023			2024
Balance at beginning of year	¥	3,358		¥	3,212		¥	2,988
Remeasurement	¥	42		¥	232		¥	97
Write-offs		(191	)		(461	)		(345	)
Exchange differences on translating foreign operations		3			5			8
Balance at end of year	¥	3,212		¥	2,988		¥	2,748

The allowance for impairment losses on other financial assets for the years ended March 31, 2022, 2023 and 2024 are mainly for credit-impaired financial assets.

F-34

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Major securities included in the equity securities designated as financial assets measured at fair value through other comprehensive income as of March 31, 2023 and 2024 are as follows:

As of March 31, 2023

	Yen (millions)
	Fair value
Contemporary Amperex Technology Co., Ltd.	¥	181,366
GM Cruise Holdings LLC		115,556
Stanley Electric Co., Ltd.		49,051
Mitsubishi UFJ Financial Group, Inc.		12,296
Tokio Marine Holdings, Inc.		8,349
Chubb Limited		7,998

As of March 31, 2024

	Yen (millions)
	Fair value
Contemporary Amperex Technology Co., Ltd.	¥	163,986
GM Cruise Holdings LLC		65,802
Renesas Electronics Corporation		47,139
Stanley Electric Co., Ltd.		47,110
Mitsubishi UFJ Financial Group, Inc.		22,580
GS Yuasa Corporation		15,464

(9) Inventories

Inventories as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023		2024
Finished goods	¥	1,154,926	¥	1,521,673
Work in process		95,041		93,412
Raw materials		917,217		827,884
Total	¥	2,167,184	¥	2,442,969

The amounts of write-down of inventories recognized as an expense for the years ended March 31, 2022, 2023 and 2024 are ¥11,295 million, ¥8,400 million and ¥12,220 million, respectively.

F-35

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(10) Investments accounted for using the equity method

Honda’s equity in affiliates and joint ventures as of March 31, 2023 and 2024 is as follows:

	Yen (millions)
	2023		2024
Investments accounted for using the equity method:
Affiliates	¥	499,942	¥	715,901
Joint ventures		416,004		491,067
Total	¥	915,946	¥	1,206,968
Honda’s equity of undistributed earnings:
Affiliates	¥	87,284	¥	111,787
Joint ventures		259,675		279,915
Total	¥	346,959	¥	391,702

For the year ended March 31, 2023, for certain investments accounted for using the equity method with quoted market prices in active markets, the Company recognized impairment losses to the recoverable amounts based on the fair values because there was objective evidence of impairment due to declines in quoted market prices.

Furthermore, for the year ended March 31, 2023, for certain investments accounted for using the equity method with no quoted market prices in active markets, the Company recognized impairment losses to the recoverable amounts based on the value in use because there was objective evidence of impairment where the transaction price in the share purchase agreement executed during the year ended March 31, 2023 was below the acquisition cost.

For the year ended March 31, 2023, the Company recognized impairment losses of ¥68,545 million in total, which are included in share of profit of investments accounted for using the equity method in the consolidated statements of income and mainly included in Automobile business. For the year ended March 31, 2024, the Company did not recognize any significant impairment losses.

Honda’s share of comprehensive income of affiliates and joint ventures for the years ended March 31, 2022, 2023 and 2024 is as follows:

	Yen (millions)
	2022			2023			2024
Profit for the year:
Affiliates	¥	(17,844	)	¥	(81,504	)	¥	26,490
Joint ventures		220,356			198,949			84,327
Total	¥	202,512		¥	117,445		¥	110,817
Other comprehensive income:
Affiliates	¥	26,673		¥	25,920		¥	31,797
Joint ventures		52,560			4,801			30,856
Total	¥	79,233		¥	30,721		¥	62,653
Comprehensive income for the year:
Affiliates	¥	8,829		¥	(55,584	)	¥	58,287
Joint ventures		272,916			203,750			115,183
Total	¥	281,745		¥	148,166		¥	173,470

F-36

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Investments accounted for using the equity method, Honda’s equity of undistributed earnings, profit for the year, other comprehensive income and comprehensive income for the year items include a joint venture that is material to the Company.

(Material joint venture)

Dongfeng Honda Automobile Co., Ltd. is a joint venture that is material to the Company. Dongfeng Honda Automobile Co., Ltd., located in Wuhan City, China, manufactures and sells automobile products. Honda and Dongfeng Motor Corporation each holds 50% equity stake in Dongfeng Honda Automobile Co., Ltd.

Summarized consolidated financial information of Dongfeng Honda Automobile Co., Ltd. as of March 31, 2023 and 2024 is as follows:

	Yen (millions)
	2023			2024
Current assets	¥	615,524		¥	602,784
Non-current assets		279,691			361,830
Total assets		895,215			964,614
Current liabilities		520,257			552,719
Non-current liabilities		31,680			37,016
Total liabilities		551,937			589,735
Total equity	¥	343,278		¥	374,879
Honda’s share of total equity (50%)		171,639			187,439
Equity method adjustments		(636	)		(612	)
Carrying amount of its interest in the joint venture	¥	171,003		¥	186,827
Cash and cash equivalents included in current assets	¥	99,862		¥	163,009
Financial liabilities (excluding trade payables and provisions) included in current liabilities		6,803			6,549

Summarized consolidated financial information of Dongfeng Honda Automobile Co., Ltd. for the years ended March 31, 2022, 2023 and 2024 is as follows:

	Yen (millions)
	2022		2023		2024
Sales revenue	¥	1,994,534	¥	1,777,882	¥	1,816,390
Interest income		10,653		8,441		5,653
Depreciation and amortization		25,996		28,052		29,311
Income tax expense		60,868		52,826		8,207
Profit for the year		182,989		157,914		27,985
Other comprehensive income		44,812		3,256		24,398
Comprehensive income for the year	¥	227,801	¥	161,170	¥	52,383
Comprehensive income for the year (50%)		113,901		80,585		26,192
Equity method adjustments		607		67		69
Honda’s share of comprehensive income for the year	¥	114,508	¥	80,652	¥	26,261
Dividend from the joint venture to Honda	¥	79,191	¥	86,506	¥	10,668

F-37

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Combined financial information in respect of affiliates as of March 31, 2023 and 2024, and for the years ended March 31, 2022, 2023 and 2024 is as follows:

	Yen (millions)
For the year ended March 31, 2022	Motorcycle Business		Automobile Business		Power Products and Other Businesses		Total
Sales revenue	¥	173,696	¥	3,120,190	¥	7,146	¥	3,301,032
Profit for the year		7,233		73,169		996		81,398

	Yen (millions)
As of and for the year ended March 31, 2023	Motorcycle Business		Automobile Business			Power Products and Other Businesses		Total
Current assets	¥	64,051	¥	1,746,374		¥	18,441	¥	1,828,866
Non-current assets		25,654		2,050,459			24,110		2,100,223
Total assets		89,705		3,796,833			42,551		3,929,089
Current liabilities		29,887		1,205,478			4,319		1,239,684
Non-current liabilities		3,109		539,040			655		542,804
Total liabilities		32,996		1,744,518			4,974		1,782,488
Total equity	¥	56,709	¥	2,052,315		¥	37,577	¥	2,146,601
Sales revenue	¥	189,332	¥	3,800,943		¥	9,187	¥	3,999,462
Profit for the year		10,038		(45,204	)		1,901		(33,265	)
	Yen (millions)
As of and for the year ended March 31, 2024	Motorcycle Business		Automobile Business			Power Products and Other Businesses		Total
Current assets	¥	72,203	¥	1,988,023		¥	22,696	¥	2,082,922
Non-current assets		24,867		2,400,612			26,272		2,451,751
Total assets		97,070		4,388,635			48,968		4,534,673
Current liabilities		29,538		1,348,062			5,433		1,383,033
Non-current liabilities		3,542		701,643			685		705,870
Total liabilities		33,080		2,049,705			6,118		2,088,903
Total equity	¥	63,990	¥	2,338,930		¥	42,850	¥	2,445,770
Sales revenue	¥	178,964	¥	4,425,320		¥	10,335	¥	4,614,619
Profit for the year		12,744		38,348			2,193		53,285

F-38

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Combined financial information in respect of joint ventures as of March 31, 2023 and 2024, and for the years ended March 31, 2022, 2023 and 2024 is as follows:

	Yen (millions)
For the year ended March 31, 2022	Motorcycle Business		Automobile Business		Power Products and Other Businesses		Total
Sales revenue	¥	811,764	¥	4,612,394	¥	3,940	¥	5,428,098
Profit for the year		62,907		375,642		363		438,912
	Yen (millions)
As of and for the year ended March 31, 2023	Motorcycle Business		Automobile Business		Power Products and Other Businesses		Total
Current assets	¥	337,603	¥	1,579,996	¥	3,677	¥	1,921,276
Non-current assets		134,567		544,319		989		679,875
Total assets		472,170		2,124,315		4,666		2,601,151
Current liabilities		275,607		1,397,048		1,791		1,674,446
Non-current liabilities		23,272		74,136		2,184		99,592
Total liabilities		298,879		1,471,184		3,975		1,774,038
Total equity	¥	173,291	¥	653,131	¥	691	¥	827,113
Sales revenue	¥	1,071,031	¥	4,360,348	¥	6,022	¥	5,437,401
Profit for the year		93,766		304,119		1,779		399,664
	Yen (millions)
As of and for the year ended March 31, 2024	Motorcycle Business		Automobile Business		Power Products and Other Businesses		Total
Current assets	¥	376,630	¥	1,206,741	¥	3,852	¥	1,587,223
Non-current assets		201,692		682,236		880		884,808
Total assets		578,322		1,888,977		4,732		2,472,031
Current liabilities		320,335		1,026,763		1,875		1,348,973
Non-current liabilities		72,977		72,063		2,441		147,481
Total liabilities		393,312		1,098,826		4,316		1,496,454
Total equity	¥	185,010	¥	790,151	¥	416	¥	975,577
Sales revenue	¥	1,103,578	¥	4,003,276	¥	4,183	¥	5,111,037
Profit for the year		100,242		67,056		1,674		168,972

The amounts of a joint venture that is material to the Company are included in above.

F-39

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(11) Equipment on Operating Leases

Equipment on operating leases are mainly vehicles.

The changes in cost, accumulated depreciation and impairment losses, and the carrying amounts of equipment on operating leases for the years ended March 31, 2023 and 2024 are as follows:

(Cost)

	Yen (millions)
Balance as of April 1, 2022	¥	6,667,137
Additions	¥	1,543,448
Sales or disposal		(2,357,684	)
Exchange differences on translating foreign operations		414,052
Other		—
Balance as of March 31, 2023	¥	6,266,953
Additions	¥	2,448,469
Sales or disposal		(2,662,279	)
Exchange differences on translating foreign operations		625,564
Other		—
Balance as of March 31, 2024	¥	6,678,707

(Accumulated depreciation and impairment losses)

	Yen (millions)
Balance as of April 1, 2022	¥	(1,508,008	)
Depreciation	¥	(904,778	)
Sales or disposal		955,122
Exchange differences on translating foreign operations		(77,740	)
Other		(5,257	)
Balance as of March 31, 2023	¥	(1,540,661	)
Depreciation	¥	(829,868	)
Sales or disposal		1,043,821
Exchange differences on translating foreign operations		(134,587	)
Other		(14,644	)
Balance as of March 31, 2024	¥	(1,475,939	)

(Carrying amount)

	Yen (millions)
Balance as of March 31, 2023	¥	4,726,292
Balance as of March 31, 2024		5,202,768

F-40

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Future lease payments)

Future lease payments expected to be received under the operating leases by maturity as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023		2024
Within 1 year	¥	737,110	¥	810,011
Between 1 and 2 years		458,830		614,883
Between 2 and 3 years		220,722		314,854
Between 3 and 4 years		78,727		108,572
Between 4 and 5 years		25,641		31,106
Later than 5 years		10,148		10,427
Total	¥	1,531,178	¥	1,889,853

Future lease payments expected to be received as shown above should not necessarily be considered indicative of future cash collections.

(Lease income)

Operating leases income for the years ended March 31, 2023 and 2024 are ¥1,152,964 million and ¥1,141,819 million, respectively.

(12) Property, Plant and Equipment

The changes in cost, accumulated depreciation and impairment losses, and the carrying amounts of property, plant and equipment for the years ended March 31, 2023 and 2024 are as follows:

(Cost)

	Yen (millions)
	Land			Buildings and structures			Machinery and equipment			Construction in progress			Total
Balance as of April 1, 2022	¥	645,472		¥	2,698,266		¥	6,147,929		¥	237,574		¥	9,729,241
Additions		10,366			35,335			87,630			444,732			578,063
Reclassification		4,198			47,021			476,942			(528,161	)		—
Sales or disposal		(9,980	)		(80,024	)		(297,580	)		—			(387,584	)
Deconsolidation		(3,580	)		(19,932	)		(82,733	)		(3,384	)		(109,629	)
Exchange differences on translating foreign operations		7,167			84,744			285,024			16,047			392,982
Other		275			(6,556	)		(1,572	)		(2,029	)		(9,882	)
Balance as of March 31, 2023	¥	653,918		¥	2,758,854		¥	6,615,640		¥	164,779		¥	10,193,191
Additions		8,328			35,397			113,006			325,741			482,472
Reclassification		8,129			74,106			199,180			(281,415	)		—
Sales or disposal		(4,078	)		(39,594	)		(285,196	)		—			(328,868	)
Deconsolidation		(7,346	)		(36,633	)		(109,783	)		(4,149	)		(157,911	)
Exchange differences on translating foreign operations		15,409			165,930			609,316			17,450			808,105
Other		202			(3,662	)		13,886			(2,527	)		7,899
Balance as of March 31, 2024	¥	674,562		¥	2,954,398		¥	7,156,049		¥	219,879		¥	11,004,888

F-41

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Accumulated depreciation and impairment losses)

	Yen (millions)
	Land			Buildings and structures			Machinery and equipment			Construction in progress			Total
Balance as of April 1, 2022	¥	(22,919	)	¥	(1,633,202	)	¥	(4,992,710	)	¥	(1,003	)	¥	(6,649,834	)
Depreciation		(6,025	)		(96,136	)		(410,340	)		—			(512,501	)
Sales or disposal		6,090			72,290			274,535			—			352,915
Deconsolidation		2,580			18,743			80,882			3,384			105,589
Exchange differences on translating foreign operations		(87	)		(48,748	)		(245,648	)		126			(294,357	)
Other		(2,863	)		(7,768	)		(12,857	)		(3,406	)		(26,894	)
Balance as of March 31, 2023	¥	(23,224	)	¥	(1,694,821	)	¥	(5,306,138	)	¥	(899	)	¥	(7,025,082	)
Depreciation		(6,086	)		(107,219	)		(450,649	)		—			(563,954	)
Sales or disposal		3,002			31,498			260,947			—			295,447
Deconsolidation		1,425			24,264			89,502			331			115,522
Exchange differences on translating foreign operations		(334	)		(98,578	)		(494,162	)		1			(593,073	)
Other		(225	)		(594	)		1,318			166			665
Balance as of March 31, 2024	¥	(25,442	)	¥	(1,845,450	)	¥	(5,899,182	)	¥	(401	)	¥	(7,770,475	)

(Carrying amount)

	Yen (millions)
	Land		Buildings and structures		Machinery and equipment		Construction in progress		Total
Balance as of March 31, 2023	¥	630,694	¥	1,064,033	¥	1,309,502	¥	163,880	¥	3,168,109
Balance as of March 31, 2024		649,120		1,108,948		1,256,867		219,478		3,234,413

For commitments for purchases of property, plant and equipment, see note 28.

(Right-of-use Assets)

Property, plant and equipment in the consolidated statements of financial position includes the right-of-use assets under lease arrangements, which are mainly included in Automobile business.

Honda leases mainly dealer’s stores, company housing and parking lots, under arrangements that often contain extension and termination options. Since lease contracts are managed at each company and individually negotiated, the lease contracts include various terms. Extension and termination options are included mainly in order to enhance operational flexibly of each company.

F-42

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The changes in the carrying amounts of the right-of-use assets for the years ended March 31, 2023 and 2024 are as follows:

	Yen (millions)
	Land			Buildings and structures			Machinery and equipment			Total
Balance as of April 1, 2022	¥	81,637		¥	130,181		¥	95,882		¥	307,700
Additions		10,386			30,294			43,474			84,154
Depreciation		(6,025	)		(15,887	)		(51,193	)		(73,105	)
Other		370			(8,529	)		(2,245	)		(10,404	)
Balance as of March 31, 2023	¥	86,368		¥	136,059		¥	85,918		¥	308,345
Additions		7,887			28,103			58,496			94,486
Depreciation		(6,086	)		(18,433	)		(53,389	)		(77,908	)
Other		3,017			(8,131	)		3,202			(1,912	)
Balance as of March 31, 2024	¥	91,186		¥	137,598		¥	94,227		¥	323,011

(13) Intangible Assets

The changes in cost, accumulated amortization and impairment losses, and carrying amounts of intangible assets for the years ended March 31, 2023 and 2024 are as follows:

(Cost)

	Yen (millions)
	Capitalized development costs			Software			Other			Total
Balance as of April 1, 2022	¥	1,156,290		¥	462,251		¥	64,892		¥	1,683,433
Additions	¥	—		¥	12,163		¥	35,103		¥	47,266
Internally developed		120,811			28,088			—			148,899
Sales or disposal		(267,115	)		(5,107	)		(9,741	)		(281,963	)
Exchange differences on translating foreign operations		4,280			15,870			3,503			23,653
Other		—			4,285			(336	)		3,949
Balance as of March 31, 2023	¥	1,014,266		¥	517,550		¥	93,421		¥	1,625,237
Additions	¥	—		¥	13,144		¥	41,165		¥	54,309
Internally developed		207,519			42,896			—			250,415
Sales or disposal		(128,194	)		(16,228	)		(14,826	)		(159,248	)
Exchange differences on translating foreign operations		12,224			36,984			14,517			63,725
Other		(4,254	)		3,636			(3,648	)		(4,266	)
Balance as of March 31, 2024	¥	1,101,561		¥	597,982		¥	130,629		¥	1,830,172

F-43

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Accumulated amortization and impairment losses)

	Yen (millions)
	Capitalized development costs			Software			Other			Total
Balance as of April 1, 2022	¥	(462,641	)	¥	(359,469	)	¥	(11,816	)	¥	(833,926	)
Amortization	¥	(149,659	)	¥	(29,058	)	¥	(880	)	¥	(179,597	)
Sales or disposal		267,115			4,693			938			272,746
Exchange differences on translating foreign operations		(719	)		(12,893	)		(758	)		(14,370	)
Other		—			(1,036	)		1,846			810
Balance as of March 31, 2023	¥	(345,904	)	¥	(397,763	)	¥	(10,670	)	¥	(754,337	)
Amortization	¥	(154,780	)	¥	(30,029	)	¥	(855	)	¥	(185,664	)
Sales or disposal		128,194			15,315			219			143,728
Exchange differences on translating foreign operations		(1,935	)		(29,418	)		(1,656	)		(33,009	)
Other		2,055			(3,997	)		741			(1,201	)
Balance as of March 31, 2024	¥	(372,370	)	¥	(445,892	)	¥	(12,221	)	¥	(830,483	)

(Carrying amount)

	Yen (millions)
	Capitalized development costs		Software		Other		Total
Balance as of March 31, 2023	¥	668,362	¥	119,787	¥	82,751	¥	870,900
Balance as of March 31, 2024		729,191		152,090		118,408		999,689

Amortization of capitalized development costs is included in research and development, and amortization of other intangible assets is included in cost of sales, selling, general and administrative, and research and development in the consolidated statements of income.

For commitments for purchases of intangible assets, see note 28.

(14) Trade Payables

Trade payables are classified as financial liabilities measured at amortized cost.

Trade payables as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023		2024
Trade accounts and notes payable	¥	1,181,893	¥	1,310,944
Other		244,440		298,892
Total	¥	1,426,333	¥	1,609,836

F-44

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(15) Financing Liabilities

Financing liabilities are classified as financial liabilities measured at amortized cost.

Financing liabilities presented in current liabilities as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023		2024
Current:
Commercial paper	¥	965,468	¥	959,620
Loans		358,874		387,093
Medium-term notes		—		90,835
Asset-backed securities		41,433		79,299
Subtotal	¥	1,365,775	¥	1,516,847
Reclassification from non-current liabilities (Current portion)	¥	1,925,420	¥	2,588,743
Total	¥	3,291,195	¥	4,105,590

The weighted average interest rates for financing liabilities presented in current liabilities (excluding reclassification from non-current liabilities) as of March 31, 2023 and 2024 are as follows:

	2023			2024
Weighted average interest rate		4.29	%		4.94	%

Financing liabilities presented in non-current liabilities as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023			2024
Non-current:
Loans	¥	958,836		¥	1,050,890
Medium-term notes		3,359,462			5,129,411
Corporate bonds		1,001,187			1,038,311
Asset-backed securities		979,908			1,428,098
Subtotal	¥	6,299,393		¥	8,646,710
Reclassification to current liabilities (Current portion)	¥	(1,925,420	)	¥	(2,588,743	)
Total	¥	4,373,973		¥	6,057,967

The interest rate range and payment due date for financing liabilities presented in non-current liabilities (including reclassification to current liabilities) as of March 31, 2023 and 2024 are as follows:

	2023	2024
Loans	Interest rate: 0.14% - 12.90% Due: 2023 - 2046	Interest rate: 0.14% - 13.06% Due: 2024 - 2046
Medium-term notes	Interest rate: 0.30% - 5.88% Due: 2023 - 2031	Interest rate: 0.30% - 6.40% Due: 2024 - 2034
Corporate bonds	Interest rate: 0.01% - 2.97% Due: 2023 - 2032	Interest rate: 0.03% - 2.97% Due: 2024 - 2032
Asset-backed securities	Interest rate: 0.11% - 5.50% Due: 2023 - 2028	Interest rate: 0.11% - 5.94% Due: 2024 - 2028

F-45

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Pledged assets)

Pledged assets for financing liabilities as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Trade receivables	¥	20,811	¥	34,137
Receivables from financial services		944,414		1,520,521
Inventories		—		4,117
Equipment on operating leases		133,936		86,455
Property, plant and equipment		2,293		2,491
Total	¥	1,101,454	¥	1,647,721

Receivables from financial services and equipment on operating leases are pledged as collateral for liabilities related to asset-backed securities transactions. Other items are mainly pledged as collateral for secured bank loans.

As is customary in Japan, bank loans are extended under general agreements which provide that security and guarantees for present and future indebtedness will be given upon request of the bank, and that the bank shall have the right to offset cash deposits against obligations that have become due or, in the event of default, against all obligations due to the bank.

(Reconciliation of liabilities arising from financing activities)

The changes in liabilities arising from financing activities for the years ended March 31, 2022, 2023 and 2024 are as follows:

For the year ended March 31, 2022

	Yen (millions)
	Balance as of April 1, 2021			Cash flows from financing activities			Cash flows from operating activities			Non-cash changes									Balance as of March 31, 2022
										Acquisitions		Changes in foreign currency exchange rates		Changes in fair value		Other
Short-term financing liabilities	¥	1,299,347		¥	(472,420	)	¥	—		¥	—	¥	78,863	¥	—	¥	753		¥	906,543
Long-term financing liabilities		6,421,638			238,060			—			—		526,822		—		9,493			7,196,013
Lease liabilities		317,429			(80,165	)		—			84,413		6,096		—		(9,015	)		318,758
Derivative financial liabilities (assets)*		(33,883	)		3,202			(1,296	)		—		3,217		67,396		—			38,636
Total	¥	8,004,531		¥	(311,323	)	¥	(1,296	)	¥	84,413	¥	614,998	¥	67,396	¥	1,231		¥	8,459,950

F-46

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

For the year ended March 31, 2023

	Yen (millions)
	Balance as of April 1, 2022		Cash flows from financing activities			Cash flows from operating activities			Non-cash changes									Balance as of March 31, 2023
									Acquisitions		Changes in foreign currency exchange rates		Changes in fair value		Other
Short-term financing liabilities	¥	906,543	¥	442,534		¥	—		¥	—	¥	27,055	¥	—	¥	(10,357	)	¥	1,365,775
Long-term financing liabilities		7,196,013		(1,356,965	)		—			—		459,754		—		591			6,299,393
Lease liabilities		318,758		(78,297	)		—			79,202		3,675		—		(7,380	)		315,958
Derivative financial liabilities (assets)*		38,636		(54,158	)		(8,641	)		—		3,718		85,721		—			65,276
Total	¥	8,459,950	¥	(1,046,886	)	¥	(8,641	)	¥	79,202	¥	494,202	¥	85,721	¥	(17,146)		¥	8,046,402

For the year ended March 31, 2024

	Yen (millions)
	Balance as of April 1, 2023		Cash flows from financing activities			Cash flows from operating activities			Non-cash changes										Balance as of March 31, 2024
									Acquisitions		Changes in foreign currency exchange rates		Changes in fair value			Other
Short-term financing liabilities	¥	1,365,775	¥	(24,382	)	¥	—		¥	—	¥	177,888	¥	—		¥	(2,434	)	¥	1,516,847
Long-term financing liabilities		6,299,393		1,593,898			—			—		751,082		—			2,337			8,646,710
Lease liabilities		315,958		(80,513	)		—			92,612		9,509		—			(5,160	)		332,406
Derivative financial liabilities (assets)*		65,276		4,983			(36,665)			—		11,112		(32,957	)		—			11,749
Total	¥	8,046,402	¥	1,493,986		¥	(36,665	)	¥	92,612	¥	949,591	¥	(32,957	)	¥	(5,257)		¥	10,507,712

Explanatory note:

* Derivative financial liabilities (assets) are held by the Company and its finance subsidiaries to hedge foreign currency risk for principals and interests payment of long-term financing liabilities. The cash flows related to repayments of principals are included in cash flows from financing activities, while the cash flows related to interest paid are included in cash flows from operating activities.

F-47

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(16) Other Financial Liabilities

Other financial liabilities as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
	2023		2024
Financial liabilities measured at amortized cost	¥	53,920	¥	88,779
Financial liabilities measured at fair value through profit or loss:
Derivatives		242,968		236,592
Lease liabilities		315,958		332,406
Total	¥	612,846	¥	657,777
Current liabilities	¥	324,110	¥	340,858
Non-current liabilities		288,736		316,919
Total	¥	612,846	¥	657,777

(17) Provisions

The components of and changes in provisions for the year ended March 31, 2024 are as follows:

	Yen (millions)
	Product warranties*			Other			Total
Balance as of April 1, 2023	¥	535,099		¥	97,771		¥	632,870
Provision	¥	536,590		¥	56,590		¥	593,180
Write-offs		(221,054	)		(24,022	)		(245,076	)
Reversal		(88,266	)		(5,981	)		(94,247	)
Exchange differences on translating foreign operations		52,821			12,175			64,996
Balance as of March 31, 2024	¥	815,190		¥	136,533		¥	951,723

Current liabilities and non-current liabilities of provisions as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Current liabilities	¥	362,701	¥	566,722
Non-current liabilities		270,169		385,001
Total	¥	632,870	¥	951,723

Explanatory note:

* Honda recognizes provisions for product warranties to cover future product warranty expenses. Honda recognizes costs for general warranties on products Honda sells and for specific warranty programs, including product recalls. Honda recognizes general estimated warranty costs at the time products are sold to customers. Honda also recognizes specific estimated warranty program costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. These provisions are estimated based on historical warranty claim experience with consideration given to the expected level of future warranty costs, including current sales trends, the expected number of units to be affected and the estimated average repair cost per unit for warranty claims. Provisions for product warranties are utilized for expenditures based on the demand from customers and dealers. A portion of the product warranties is expected to be reimbursed by agreement with suppliers. The amount of expected reimbursement is ¥167,920 million as of March 31, 2024.

F-48

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(18) Employee Benefits

(a) Post-employment Benefits

Honda has various pension plans covering substantially all of its employees in Japan and certain employees in foreign countries. The Company and its Japanese subsidiaries provide plans similar to a cash balance pension plan or other defined benefit pension plans in accordance with the Defined-Benefit Corporate Pension Act of Japan. The Company and some of its subsidiaries have retirement pension benefit plans as well as lump-sum retirement benefit plans, in which the amount of benefits is basically determined based on the level of salary, service years, and other factors. In addition, certain consolidated subsidiaries in North America provide mainly health care and life insurance benefits to retired employees.

The Company’s pension plans are administered by the Honda Pension Fund (the Fund) which is legally independent of the Company. The Director of the Fund has the fiduciary duty to comply with laws, the directives by the Minister of Health, Labour and Welfare, and the Director-Generals of Regional Bureaus of Health and Welfare made pursuant to those laws, and the by-laws of the Fund and the decisions made by the Board of Representatives of the Fund. The Company is required to make contributions to the Fund and obligated to make contributions in the amount stipulated by the Fund. Contributions are also regularly reviewed and adjusted as necessary to the extent permitted by laws and regulations.

F-49

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

1) Defined benefit obligations and plan assets

The changes in present value of defined benefit obligations and fair value of plan assets of the Company and certain of its consolidated subsidiaries for the years ended March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023						2024
	Japanese plans			Foreign plans			Japanese plans			Foreign plans
Present value of defined benefit obligations:
Balance at beginning of year	¥	1,262,245		¥	1,087,526		¥	1,160,727		¥	925,961
Current service cost		30,632			22,555			27,397			17,702
Past service cost		—			—			—			(271	)
Interest cost		9,732			40,151			13,944			47,108
Plan participants’ contributions		—			4,165			—			4,447
Remeasurements:
Changes in demographic assumptions		(3,387	)		(317	)		(4,249	)		(724	)
Changes in financial assumptions		(71,936	)		(220,863	)		(44,232	)		(14,686	)
Other		12,291			38,427			(91	)		(1,446	)
Benefits paid		(63,085	)		(116,150	)		(59,464	)		(66,563	)
Deconsolidation		(15,765	)		—			(12,640	)		—
Exchange differences on translating foreign operations		—			70,467			—			125,595
Balance at end of year	¥	1,160,727		¥	925,961		¥	1,081,392		¥	1,037,123
Fair value of plan assets:
Balance at beginning of year	¥	1,355,276		¥	1,013,050		¥	1,236,755		¥	879,975
Interest income		10,589			37,211			15,030			45,291
Actual return on plan assets, excluding interest income		(76,690	)		(137,659	)		43,828			(6,964	)
Employer contributions		20,409			21,178			20,108			16,819
Plan participants’ contributions		—			4,165			—			4,447
Benefits paid		(58,544	)		(116,150	)		(54,727	)		(66,563	)
Deconsolidation		(14,285	)		—			(13,935	)		—
Exchange differences on translating foreign operations		—			58,180			—			120,396
Balance at end of year	¥	1,236,755		¥	879,975		¥	1,247,059		¥	993,401
Effects of asset ceiling		—			62,516			123,505			86,321
Net defined benefit liabilities (assets)	¥	(76,028	)	¥	108,502		¥	(42,162	)	¥	130,043

Retirement benefit assets included in net defined benefit liabilities (assets) as of March 31, 2023 and 2024 are ¥180,700 million and ¥148,296 million, respectively, which are presented in other non-current assets in the consolidated statements of financial position.

F-50

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

2) Fair value of plan assets

Honda’s investment policies for the Japanese and foreign pension plan assets are designed to maximize total medium-to-long term returns that are available to provide future payments of pension benefits to eligible participants under accepted risks. Plan assets are invested in well-diversified Japanese and foreign individual equity and debt securities using target asset allocations, consistent with accepted tolerance for risks. Honda sets target asset allocations for each asset category with future anticipated performance over medium-to-long term periods based on the expected returns, long-term risks and historical returns. Target asset allocations are adjusted as necessary when there are significant changes in the investment environment of plan assets.

The fair value of the Japanese and foreign pension plan assets by asset category as of March 31, 2023 and 2024 is as follows:

As of March 31, 2023

	Yen (millions)
	Japanese plans						Foreign plans
	Market price in active market						Market price in active market
	Quoted		Unquoted		Total		Quoted		Unquoted		Total
Cash and cash equivalents	¥	20,230	¥	—	¥	20,230	¥	6,929	¥	—	¥	6,929
Equity securities:
Japan		22,388		—		22,388		398		—		398
United States		195,611		—		195,611		13,794		—		13,794
Other		171,921		153		172,074		7,413		—		7,413
Debt securities:
Japan		66,416		862		67,278		—		768		768
United States		35,338		136,352		171,690		—		114,757		114,757
Other		152,213		89,536		241,749		—		10,656		10,656
Group annuity insurance:
General accounts		—		40,942		40,942		—		—		—
Separate accounts		—		23,130		23,130		—		—		—
Pooled funds:
Real estate funds		—		398		398		—		73,017		73,017
Private equity funds		—		—		—		—		162,414		162,414
Hedge funds		—		117,422		117,422		—		26,061		26,061
Commingled and other mutual funds		1,419		151,752		153,171		—		454,352		454,352
Other		54		10,618		10,672		263		9,153		9,416
Total	¥	665,590	¥	571,165	¥	1,236,755	¥	28,797	¥	851,178	¥	879,975

F-51

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

As of March 31, 2024

	Yen (millions)
	Japanese plans								Foreign plans
	Market price in active market								Market price in active market
	Quoted		Unquoted			Total			Quoted		Unquoted		Total
Cash and cash equivalents	¥	14,251	¥	—		¥	14,251		¥	8,946	¥	—	¥	8,946
Equity securities:
Japan		25,610		—			25,610			403		—		403
United States		211,349		—			211,349			12,308		—		12,308
Other		176,452		127			176,579			6,764		—		6,764
Debt securities:
Japan		53,981		1,042			55,023			—		414		414
United States		149,531		16,055			165,586			—		161,319		161,319
Other		141,011		114,569			255,580			—		12,650		12,650
Group annuity insurance:
General accounts		—		39,329			39,329			—		—		—
Separate accounts		—		29,350			29,350			—		—		—
Pooled funds:
Real estate funds		—		204			204			—		78,832		78,832
Private equity funds		—		—			—			—		171,660		171,660
Hedge funds		—		134,096			134,096			—		31,495		31,495
Commingled and other mutual funds		1,289		152,466			153,755			—		464,649		464,649
Other		19		(13,672	)		(13,653	)		424		43,537		43,961
Total	¥	773,493	¥	473,566		¥	1,247,059		¥	28,845	¥	964,556	¥	993,401

3) Actuarial assumptions

The significant actuarial assumptions used to determine the present value of defined benefit obligations as of March 31, 2023 and 2024 are as follows:

	2023						2024
	Japanese plans			Foreign plans			Japanese plans			Foreign plans
Discount rate		1.2	%		4.8 - 5.1	%		1.6	%		4.9 - 5.2	%
Rate of salary increase		1.6	%		2.0 - 4.4	%		1.6	%		2.0 - 7.5	%

4) Sensitivity analysis

The effects on defined benefit obligations of 0.5% increase or decrease in the discount rate as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023				2024
	Japanese plans		Foreign plans		Japanese plans		Foreign plans
0.5% decrease	¥	80,821 increase	¥	57,236 increase	¥	70,025 increase	¥	67,928 increase
0.5% increase	¥	72,450 decrease	¥	50,643 decrease	¥	63,047 decrease	¥	59,881 decrease

F-52

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

This sensitivity analysis shows changes in defined benefit obligations as of March 31, 2023 and 2024, as a result of changes in actuarial assumptions that the Company can reasonably assume. This analysis is based on provisional calculations, and thus actual results may differ from the analysis. In addition, changes in the rate of salary increase are not expected.

5) Cash flows

The amount of contributions to plan assets made by the Company and certain of its consolidated subsidiaries is determined based on various factors such as the level of salary and service years of employees, status of plan asset reserve, and actuarial calculations. In accordance with the provisions of the Defined Benefit Corporate Pension Act, the Honda Pension Fund also recalculates the amount of contributions every five years at the end of the reporting period as a base date, in an effort to ensure balanced finances in the future. The Company and certain of its consolidated subsidiaries may make contributions of a necessary amount if the amount of reserve falls below the minimum base amount.

The Company and certain of its consolidated subsidiaries expect to contribute ¥19,970 million to its Japanese pension plans and ¥18,282 million to its foreign pension plans in the year ending March 31, 2025.

The weighted average duration of defined benefit obligations as of March 31, 2023 and 2024 are as follows:

	2023				2024
	Japanese plans		Foreign plans		Japanese plans		Foreign plans
Weighted average duration of defined benefit obligations		13 years		11 years		12 years		11 years

(b) Personnel Expenses

Personnel expenses included in the consolidated statements of income for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Yen (millions)
	2022		2023		2024
Personnel expenses	¥	1,502,364	¥	1,635,515	¥	1,807,731

Personnel expenses include salaries, bonuses, social security expenses and expenses relating to post-employment benefits.

(19) Equity

(a) Management of Capital

Honda makes investments in capital and research and development to improve corporate value through growth on a global basis. In order to meet these funding needs, Honda makes capital management through consideration of the balance between financing liabilities and equity.

Financing liabilities and equity of Honda as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Financing liabilities	¥	7,665,168	¥	10,163,557
Equity		11,502,291		13,005,872

F-53

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(b) Common Stock

The Company’s total number of shares authorized and issued for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Shares
	2022		2023		2024
Total number of authorized shares
Balance at end of year
Common shares, no par value		7,086,000,000		7,086,000,000		7,086,000,000
Total number of issued shares
Balance at beginning of year		1,811,428,430		1,811,428,430		1,811,428,430
Changes during the year*		—		—		3,468,571,570
Balance at end of year		1,811,428,430		1,811,428,430		5,280,000,000

Explanatory notes:

*1 As of the effective date of October 1, 2023, the Company implemented a three-for-one stock split of its common stock to shareholders as of the record date of September 30, 2023.

*2 As of February 29, 2024, the Company cancelled 154,285,290 shares of its treasury stock based on the resolution of the Board of Directors Meeting on February 8, 2024.

All of the issued shares as of March 31, 2022, 2023 and 2024 have been paid in full.

(c) Capital Surplus and Retained Earnings

Capital surplus consists of surplus that is derived from equity transactions and not recorded in common stock, and its primary component is capital reserves. The Companies Act of Japan provides that no less than 50% of the paid-in amount or proceeds of issuance of shares shall be incorporated in common stock, and that the remaining shall be incorporated in capital reserves. Capital reserves may be incorporated in common stock upon approval of the General Meeting of Shareholders.

Retained earnings consist of legal reserves and accumulated earnings. The Companies Act of Japan provides that earnings in an amount equal to 10% of cash dividends from retained earnings shall be appropriated as a capital reserve or a legal reserve on the date of distribution of retained earnings until an aggregated amount of capital reserve and legal reserve equals 25% of common stock. Legal reserves may be used upon approval of the General Meeting of Shareholders. Certain foreign consolidated subsidiaries are also required to appropriate their earnings under the laws of respective countries.

(d) Treasury Stock

The total number of the Company’s treasury stock held by Honda as of March 31, 2022, 2023 and 2024 is as follows:

	Shares
	2022		2023		2024
Common shares		100,828,074		147,087,841		451,092,624

Under the Companies Act of Japan, the number of shares and total value of treasury stock acquisition may be determined, upon approval of the General Meeting of Shareholders, within the amount available for distribution. Furthermore, treasury stock may be acquired through market transactions or tender offers in accordance with the articles of incorporation within the conditions set forth in the Companies Act, upon approval of the Board of Directors.

F-54

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(e) Other Components of Equity

The changes in other components of equity for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Yen (millions)
	Remeasurements of defined benefit plans			Net changes in revaluation of financial assets measured at fair value through other comprehensive income			Exchange differences on translating foreign operations		Total
Balance as of April 1, 2021	¥	—		¥	88,570		¥	108,140	¥	196,710
Adjustment during the year	¥	117,489		¥	58,863		¥	736,578	¥	912,930
Reclassification to retained earnings		(117,489	)		(1,713	)		—		(119,202	)
Balance as of March 31, 2022	¥	—		¥	145,720		¥	844,718	¥	990,438
Adjustment during the year	¥	3,304		¥	(19,030	)	¥	445,739	¥	430,013
Reclassification to retained earnings		(3,304	)		250			—		(3,054	)
Balance as of March 31, 2023	¥	—		¥	126,940		¥	1,290,457	¥	1,417,397
Adjustment during the year	¥	(18,194	)	¥	(17,924	)	¥	913,456	¥	877,338
Reclassification to retained earnings		18,194			(479	)		—		17,715
Balance as of March 31, 2024	¥	—		¥	108,537		¥	2,203,913	¥	2,312,450

F-55

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(f) Other Comprehensive Income

Each component of other comprehensive income and related tax effect including non-controlling interests for the years ended March 31, 2022, 2023 and 2024 are as follows:

For the year ended March 31, 2022

	Yen (millions)
	Before-tax			Tax benefit (expense)			Net-of-tax
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans:
Amount incurred during the year	¥	153,785		¥	(36,743	)	¥	117,042
Net changes		153,785			(36,743	)		117,042
Net changes in revaluation of financial assets measured at fair value through other comprehensive income:
Amount incurred during the year		76,909			(18,274	)		58,635
Net changes		76,909			(18,274	)		58,635
Share of other comprehensive income of investments accounted for using the equity method:
Amount incurred during the year		1,862			(76	)		1,786
Net changes		1,862			(76	)		1,786
Items that may be reclassified subsequently to profit or loss:
Net changes in revaluation of financial assets measured at fair value through other comprehensive income:
Amount incurred during the year		(915	)		203			(712	)
Reclassification to profit or loss		39			(9	)		30
Net changes		(876	)		194			(682	)
Exchange differences on translating foreign operations:
Amount incurred during the year		680,724			—			680,724
Reclassification to profit or loss		—			—			—
Net changes		680,724			—			680,724
Share of other comprehensive income of investments accounted for using the equity method:
Amount incurred during the year		79,484			(1,972	)		77,512
Reclassification to profit or loss		(65	)		—			(65	)
Net changes		79,419			(1,972	)		77,447
Total other comprehensive income	¥	991,823		¥	(56,871	)	¥	934,952

F-56

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

For the year ended March 31, 2023

	Yen (millions)
	Before-tax			Tax benefit (expense)			Net-of-tax
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans:
Amount incurred during the year	¥	7,192		¥	(3,842	)	¥	3,350
Net changes		7,192			(3,842	)		3,350
Net changes in revaluation of financial assets measured at fair value through other comprehensive income:
Amount incurred during the year		(26,279	)		7,814			(18,465	)
Net changes		(26,279	)		7,814			(18,465	)
Share of other comprehensive income of investments accounted for using the equity method:
Amount incurred during the year		294			(2	)		292
Net changes		294			(2	)		292
Items that may be reclassified subsequently to profit or loss:
Net changes in revaluation of financial assets measured at fair value through other comprehensive income:
Amount incurred during the year		(444	)		98			(346	)
Reclassification to profit or loss		(166	)		38			(128	)
Net changes		(610	)		136			(474	)
Exchange differences on translating foreign operations:
Amount incurred during the year		427,650			(1,612	)		426,038
Reclassification to profit or loss		(4,690	)		1,612			(3,078	)
Net changes		422,960			—			422,960
Share of other comprehensive income of investments accounted for using the equity method:
Amount incurred during the year		32,436			(1,905	)		30,531
Reclassification to profit or loss		(102	)		—			(102	)
Net changes		32,334			(1,905	)		30,429
Total other comprehensive income	¥	435,891		¥	2,201		¥	438,092

F-57

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

For the year ended March 31, 2024

	Yen (millions)
	Before-tax			Tax benefit (expense)			Net-of-tax
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans:
Amount incurred during the year	¥	(30,696	)	¥	11,765		¥	(18,931	)
Net changes		(30,696	)		11,765			(18,931	)
Net changes in revaluation of financial assets measured at fair value through other comprehensive income:
Amount incurred during the year		(27,034	)		1,565			(25,469	)
Net changes		(27,034	)		1,565			(25,469	)
Share of other comprehensive income of investments accounted for using the equity method:
Amount incurred during the year		8,976			(676	)		8,300
Net changes		8,976			(676	)		8,300
Items that may be reclassified subsequently to profit or loss:
Net changes in revaluation of financial assets measured at fair value through other comprehensive income:
Amount incurred during the year		149			(83	)		66
Reclassification to profit or loss		(78	)		68			(10	)
Net changes		71			(15	)		56
Exchange differences on translating foreign operations:
Amount incurred during the year		880,235			(2,727	)		877,508
Reclassification to profit or loss		(5,185	)		2,727			(2,458	)
Net changes		875,050			—			875,050
Share of other comprehensive income of investments accounted for using the equity method:
Amount incurred during the year		57,139			(2,850	)		54,289
Reclassification to profit or loss		64			—			64
Net changes		57,203			(2,850	)		54,353
Total other comprehensive income	¥	883,570		¥	9,789		¥	893,359

The components of other comprehensive income included in non-controlling interests for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Yen (millions)
	2022			2023		2024
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans	¥	565		¥	341	¥	186
Net changes in revaluation of financial assets measured at fair value through other comprehensive income		(136	)		88		6
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations		21,593			7,650		18,893
Total	¥	22,022		¥	8,079	¥	19,085

F-58

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(g) Dividends from Retained Earnings

The Company distributes retained earnings within the available amount calculated in accordance with the Companies Act of Japan. The amount of retained earnings available for distribution is calculated based on the amount of retained earnings recorded in the Company’s non-consolidated accounting records prepared in accordance with accounting principles generally accepted in Japan.

The amounts recognized as dividends of retained earnings for the years ended March 31, 2022, 2023 and 2024 are as follows:

1) Dividend payout

For the year ended March 31, 2022

Resolution	The Board of Directors Meeting on May 14, 2021
Type of shares	Common shares
Total amount of dividends (millions of yen)	93,272
Dividend per share (yen)	54.00
Record date	March 31, 2021
Effective date	June 7, 2021
Resolution	The Board of Directors Meeting on November 5, 2021
Type of shares	Common shares
Total amount of dividends (millions of yen)	95,130
Dividend per share (yen)	55.00
Record date	September 30, 2021
Effective date	December 1, 2021

For the year ended March 31, 2023

Resolution	The Board of Directors Meeting on May 13, 2022
Type of shares	Common shares
Total amount of dividends (millions of yen)	111,256
Dividend per share (yen)	65.00
Record date	March 31, 2022
Effective date	June 6, 2022
Resolution	The Board of Directors Meeting on November 9, 2022
Type of shares	Common shares
Total amount of dividends (millions of yen)	102,219
Dividend per share (yen)	60.00
Record date	September 30, 2022
Effective date	December 5, 2022

F-59

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

For the year ended March 31, 2024

Resolution	The Board of Directors Meeting on May 11, 2023
Type of shares	Common shares
Total amount of dividends (millions of yen)	99,915
Dividend per share (yen)	60.00
Record date	March 31, 2023
Effective date	June 6, 2023
Resolution	The Board of Directors Meeting on November 9, 2023
Type of shares	Common shares
Total amount of dividends (millions of yen)	141,949
Dividend per share (yen)	87.00
Record date	September 30, 2023
Effective date	December 5, 2023

2) Dividends payable of which record date was in the year ended March 31, 2024, effective after the period

Resolution	The Board of Directors Meeting on May 10, 2024
Type of shares	Common shares
Resource for dividend	Retained earnings
Total amount of dividends (millions of yen)	188,418
Dividend per share (yen)	39.00
Record date	March 31, 2024
Effective date	June 4, 2024

Explanatory note:

* As of the effective date of October 1, 2023, the Company implemented a three-for-one stock split of its common stock to shareholders as of the record date of September 30, 2023. Dividend per share based on the resolution of the Board of Directors Meeting on May 10, 2024 is an amount after the stock split.

F-60

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(20) Sales Revenue

(a) Disaggregation of revenue

As stated in Note 4, Honda discloses segment information in four categories.

The sales revenue disaggregated by geographical markets based on the location of the customer and the reconciliation of the disaggregated sales revenue with each segment for the years ended March 31, 2022, 2023 and 2024 are as follows:

For the year ended March 31, 2022

	Yen (millions)
	Motorcycle Business		Automobile Business		Financial Services Business		Power Products and Other Businesses		Total
Revenue arising from contracts with customers
Japan	¥	105,022	¥	1,337,860	¥	146,185	¥	79,182	¥	1,668,249
North America		230,766		4,877,900		1,289,076		152,096		6,549,838
Europe		202,254		319,340		—		79,393		600,987
Asia		1,307,915		2,314,425		37		63,861		3,686,238
Other Regions		337,219		280,702		—		24,305		642,226
Total	¥	2,183,176	¥	9,130,227	¥	1,435,298	¥	398,837	¥	13,147,538
Revenue arising from the other sources*		2,077		17,271		1,385,369		441		1,405,158
Total	¥	2,185,253	¥	9,147,498	¥	2,820,667	¥	399,278	¥	14,552,696

For the year ended March 31, 2023

	Yen (millions)
	Motorcycle Business		Automobile Business		Financial Services Business		Power Products and Other Businesses		Total
Revenue arising from contracts with customers
Japan	¥	109,393	¥	1,375,593	¥	158,653	¥	89,627	¥	1,733,266
North America		306,725		5,985,958		1,341,863		182,126		7,816,672
Europe		250,088		332,928		—		94,328		677,344
Asia		1,739,330		2,523,613		29		55,354		4,318,326
Other Regions		502,917		360,299		—		29,464		892,680
Total	¥	2,908,453	¥	10,578,391	¥	1,500,545	¥	450,899	¥	15,438,288
Revenue arising from the other sources*		530		15,128		1,453,553		226		1,469,437
Total	¥	2,908,983	¥	10,593,519	¥	2,954,098	¥	451,125	¥	16,907,725

F-61

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

For the year ended March 31, 2024

	Yen (millions)
	Motorcycle Business		Automobile Business		Financial Services Business		Power Products and Other Businesses		Total
Revenue arising from contracts with customers
Japan	¥	113,746	¥	1,586,358	¥	172,072	¥	87,072	¥	1,959,248
North America		335,545		8,503,602		1,487,948		138,760		10,465,855
Europe		351,850		506,731		—		84,459		943,040
Asia		1,792,327		2,446,250		5		55,898		4,294,480
Other Regions		625,585		498,506		—		26,001		1,150,092
Total	¥	3,219,053	¥	13,541,447	¥	1,660,025	¥	392,190	¥	18,812,715
Revenue arising from the other sources*		1,115		26,118		1,588,783		71		1,616,087
Total	¥	3,220,168	¥	13,567,565	¥	3,248,808	¥	392,261	¥	20,428,802

Explanatory note:

* Revenue arising from the other sources primarily includes lease revenues recognized under IFRS 16 and interest recognized under IFRS 9.

(b) Contract balances

The receivables from contracts with customers and contract liabilities for the years ended March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Receivables from contracts with customers:
Trade receivables	¥	893,559	¥	982,118
Contract liabilities:
Other current liabilities		292,552		401,855
Other noncurrent liabilities		240,556		306,170

The amounts of revenue recognized for the years ended March 31, 2022, 2023 and 2024 that were included in the contract liability balances at the beginning of the year are ¥199,902 million, ¥219,873 million and ¥273,224 million, respectively. The amounts of revenue recognized for the years ended March 31, 2022, 2023 and 2024 from performance obligations satisfied (or partially satisfied) in previous years were immaterial. In addition, the balances of contract assets were immaterial.

F-62

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(c) Transaction price allocated to the remaining performance obligation

The revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Within 1 year	¥	150,507	¥	230,865
Between 1 and 5 years		280,981		355,882
Later than 5 years		14,892		22,198
Total	¥	446,380	¥	608,945

The table does not include the remaining performance obligations that have original expected durations of one year or less and estimated amounts of variable consideration that are constrained from being recognized as revenue.

(d) Assets recognized from the costs to obtain or fulfill a contract with a customer

The assets recognized from the costs to obtain a contract with a customer as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Assets recognized from the costs to obtain a contract with a customer	¥	148,074	¥	186,074

Honda recognizes the incremental costs of obtaining a contract with a customer and the costs incurred in fulfilling a contract with a customer that are directly associated with the contract as an asset, if those costs are expected to be recoverable. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The assets recognized from the costs to obtain a contract are presented in the consolidated statement of financial position mainly as other non-current assets and are amortized over the period for which the services based on a contract are provided. The amounts of assets recognized from the costs to fulfill a contract are not material.

The amounts of amortization of the assets for the years ended March 31, 2022, 2023 and 2024 are ¥39,682 million, ¥52,193 million and ¥60,391 million, respectively.

(21) Research and Development

Research and development costs for the years ended March 31, 2022, 2023 and 2024 consist of the following:

	Yen (millions)
	2022			2023			2024
Research and development expenditures incurred during the reporting period	¥	804,025		¥	852,067		¥	976,366
Amount capitalized		(159,174	)		(120,811	)		(207,519	)
Amortization and impairment losses of capitalized development costs		142,205			149,659			154,780
Total	¥	787,056		¥	880,915		¥	923,627

F-63

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(22) Finance Income and Finance Costs

Finance income and finance costs for the years ended March 31, 2022, 2023 and 2024 consist of the following:

	Yen (millions)
	2022			2023			2024
Interest income:
Financial assets measured at amortized cost	¥	22,847		¥	69,217		¥	169,287
Financial assets measured at fair value through other comprehensive income		185			497			798
Financial assets measured at fair value through profit or loss		2,595			3,357			3,610
Total		25,627			73,071			173,695
Interest expense:
Financial liabilities measured at amortized cost		(15,706	)		(34,065	)		(42,609	)
Other		(1,161	)		(2,047	)		(17,022	)
Total		(16,867	)		(36,112	)		(59,631	)
Other, net:
Dividends received:
Financial assets measured at fair value through other comprehensive income		4,777			6,150			8,804
Financial assets measured at fair value through profit or loss		—			—			—
Gains (losses) on derivatives:
Financial assets and financial liabilities measured at fair value through profit or loss		(77,789	)		(92,144	)		(202	)
Gains (losses) on foreign exchange		68,033			47,705			67,414
Other		(7,335	)		(17,319	)		(40,490	)
Total		(12,314	)		(55,608	)		35,526
Total	¥	(3,554	)	¥	(18,649	)	¥	149,590

F-64

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(23) Income Taxes

(a) Income Tax Expense

Profit before income taxes and income tax expense for the years ended March 31, 2022, 2023 and 2024 consist of the following:

	Yen (millions)
	2022							2023									2024
	Japan			Foreign		Total		Japan			Foreign			Total			Japan		Foreign			Total
Profit (loss) before income taxes	¥	(42,213	)	¥	1,112,403	¥	1,070,190	¥	(40,638	)	¥	920,203		¥	879,565		¥	148,651	¥	1,493,733		¥	1,642,384
Income tax expense (benefit):
Current taxes		9,539			277,894		287,433		12,699			353,611			366,310			19,081		606,077			625,158
Deferred taxes		(4,081	)		26,137		22,056		(92,631	)		(111,423	)		(204,054	)		34,265		(199,629	)		(165,364	)
Total	¥	5,458		¥	304,031	¥	309,489	¥	(79,932	)	¥	242,188		¥	162,256		¥	53,346	¥	406,448		¥	459,794

The benefits of deferred taxes in Japan for the year ended March 31, 2023, include tax benefits of ¥96,195 million resulting from the recognition of deferred tax assets previously unrecognized on tax losses, tax credits and deductible temporary differences since we consider it probable that future taxable profit would be available in the consolidated group under the Japanese Group Relief System, which consists of the Company and its certain consolidated subsidiaries in Japan.

The statutory income tax rate in Japan is approximately 30.2% for each of the years in the three-year period ended March 31, 2024. The foreign subsidiaries are subject to taxes based on income at rates ranging from 16.0% to 34.0%.

The Japanese statutory income tax rate for the years ended March 31, 2022, 2023 and 2024 differs from the average effective tax rate for the following reasons:

	2022			2023			2024
Statutory income tax rate		30.2	%		30.2	%		30.2	%
Difference in statutory income tax rates of foreign subsidiaries		(4.5	)		(6.3	)		(5.4	)
Effects of investments accounted for using the equity method		(5.7	)		(4.0	)		(2.0	)
Effects of undistributed earnings and withholding taxes on royalty		7.1			11.3			6.1
Changes in unrecognized deferred tax assets		1.4			(10.3	)		0.1
Effects of income and expense not taxable and deductible for tax purpose		0.0			0.1			0.0
Effects of tax credit		(0.9	)		(2.9	)		(2.6	)
Other adjustments relating to prior years		(0.1	)		(0.5	)		(0.1	)
Adjustments for the uncertain tax treatments on income taxes		0.9			0.6			0.1
Adjustments for the changes in income tax laws		0.1			(0.6	)		0.2
Other		0.4			0.8			1.4
Average effective tax rate		28.9	%		18.4	%		28.0	%

F-65

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(b) Deferred Tax Assets and Deferred Tax Liabilities

The components by major factor in deferred tax assets and deferred tax liabilities as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023			2024
Deferred tax assets:
Inventories	¥	51,604		¥	60,476
Accrued expenses		56,926			75,627
Provisions		133,007			170,286
Property, plant and equipment		27,854			40,470
Intangible assets		47,995			75,630
Retirement benefit liabilities		64,275			59,951
Lease liabilities*		70,522			72,720
Carryforward of unused tax losses		108,106			95,400
Carryforward of unused tax credit		14,930			11,387
Other*		106,043			105,431
Total	¥	681,262		¥	767,378
Deferred tax liabilities:
Property, plant and equipment*	¥	173,881		¥	154,256
Intangible assets		182,258			195,662
Other financial assets		59,275			55,074
Operating leases		772,991			776,937
Undistributed earnings		60,914			71,577
Retirement benefit assets		56,932			37,780
Receivables from financial services		68,005			63,070
Other		78,514			97,233
Total	¥	1,452,770		¥	1,451,589
Net deferred tax assets (liabilities)	¥	(771,508	)	¥	(684,211	)

Explanatory note:

* Honda has adopted “Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)” with a date of initial application of April 1, 2023 and the comparative information has been retrospectively adjusted.

F-66

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The changes in deferred tax assets and deferred tax liabilities recognized as income tax expense in the consolidated statements of income for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Yen (millions)
	2022			2023			2024
Inventories	¥	(9,865	)	¥	(7,407	)	¥	(8,335	)
Provisions		(3,491	)		(27,854	)		(26,423	)
Property, plant and equipment*1		(5,960	)		19,079			(41,544	)
Retirement benefit liabilities (assets)		(4,991	)		(4,149	)		(1,840	)
Operating leases		(35,308	)		(153,429	)		(93,321	)
Undistributed earnings		4,198			(1,005	)		8,355
Carryforward of unused tax losses		(1,608	)		(42,172	)		17,652
Carryforward of unused tax credit		16,102			9,504			4,238
Other*1 *2		62,979			3,379			(24,146	)
Total	¥	22,056		¥	(204,054	)	¥	(165,364	)

Explanatory notes:

*1 Honda has adopted “Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)” with a date of initial application of April 1, 2023 and the comparative information has been retrospectively adjusted.

*2 The income tax expense recognized due to the decrease of deferred tax assets arising from accrued expenses included in other as of March 31, 2022 is ¥27,321 million.

Honda considers the probability that a portion of, or all of, the deductible temporary differences, carryforward of unused tax losses and carryforward of unused tax credit can be utilized against future taxable profits in the recognition of deferred tax assets. In assessing recoverability of deferred tax assets, management considers the scheduled reversal of deferred tax liabilities, projected future taxable profit and tax planning strategies. Based upon the level of historical taxable profit and projections for future taxable profit over the periods for which the deferred tax assets are deductible, management believes it is probable that Honda will utilize the benefits of these deferred tax assets as of March 31, 2023 and 2024. Uncertainty of estimates of future taxable profit could increase due to changes in the economic environment surrounding Honda, effects by market conditions, effects of currency fluctuations or other factors. Deferred tax assets recognized by entities that have suffered a loss in either the preceding or current period are ¥19,414 million and ¥629 million as of March 31, 2023 and 2024, respectively.

Deductible temporary differences, carryforward of unused tax losses and carryforward of unused tax credit for which deferred tax assets are not recognized as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Deductible temporary differences	¥	391,536	¥	446,655
Carryforward of unused tax losses		532,191		439,849
Carryforward of unused tax credit		35,629		65,643

F-67

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The components by expiry of the carryforward of unused tax losses for which deferred tax assets are not recognized as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Within 1 year	¥	13,331	¥	4,088
Between 1 and 5 years		82,173		95,320
Between 5 and 20 years		107,052		55,480
Indefinite periods		329,635		284,961
Total	¥	532,191	¥	439,849

The components by expiry of the carryforward of unused tax credit for which deferred tax assets are not recognized as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Within 1 year	¥	5	¥	38
Between 1 and 5 years		35,611		65,574
Between 5 and 20 years		13		31
Indefinite periods		—		—
Total	¥	35,629	¥	65,643

The aggregate amounts of temporary differences relating to investments in subsidiaries and interests in joint ventures for which deferred tax liabilities are not recognized as of March 31, 2023 and 2024 are ¥6,956,545 million and ¥8,112,152 million, respectively.

(c) Global minimum taxation

The Pillar Two model rules released by the Organisation for Economic Co-operation and Development (OECD) have been enacted, or substantively enacted, in certain jurisdictions in which Honda operates. In Japan, the Act for Partial Amendment to the Income Tax Act, etc. (Act No. 3 of 2023) to implement the global minimum tax rule has been enacted. The Company and its certain domestic subsidiaries will be additionally taxed on the income of their foreign subsidiaries and joint ventures that are taxed below 15% in the tax jurisdictions where these subsidiaries and joint ventures are located. Since the enacted global minimum tax rule in Japan is effective from the fiscal years beginning on or after April 1, 2024, there is no current tax impact for the year ended March 31, 2024. If the global minimum tax rule had applied for the year ended March 31, 2024, the impact of it on the Company’s consolidated financial statements would have reasonably been estimated to be immaterial.

F-68

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(24) Earnings Per Share

Earnings per share attributable to owners of the parent for the years ended March 31, 2022, 2023 and 2024 are calculated based on the following information. There were no significant dilutive potential common shares outstanding for the years ended March 31, 2022, 2023 and 2024.

	2022		2023		2024
Profit for the year attributable to owners of the parent (millions of yen)	¥	707,067	¥	651,416	¥	1,107,174
Weighted average number of common shares outstanding, basic (shares)		5,159,885,505		5,088,921,345		4,901,560,332
Basic earnings per share attributable to owners of the parent (yen)	¥	137.03	¥	128.01	¥	225.88

Explanatory note:

* As of the effective date of October 1, 2023, the Company implemented a three-for-one stock split of its common stock to shareholders as of the record date of September 30, 2023. Basic earnings per share attributable to owners of the parent are calculated based on the assumption that the stock split had been implemented at the beginning of the year ended March 31, 2022.

(25) Financial Risk Management

(a) Risk Management

Honda has manufacturing operations throughout the world and sells products and components to various countries. In the course of these activities, Honda holds trade receivables arising from business activities, receivables from financial services, trade payables and financing liabilities, and is thus exposed to market risk, credit risk and liquidity risk associated with the holding of such financial instruments.

These risks are evaluated by Honda through periodic monitoring.

(b) Market Risk

Honda is exposed to the risk that the fair value or future cash flows of a financial instrument fluctuates because of changes in foreign currency exchange rates and interest rates.

Honda uses derivatives that consist mainly of foreign currency forward exchange contracts, foreign currency option contracts, currency swap agreements and interest rate swap agreements to reduce primarily the risk that future cash flows of a financial instrument fluctuates because of changes in foreign currency exchange rates and interest rates.

Derivatives are used within the scope of actual demand, in accordance with risk management policies. In addition, Honda does not hold any derivatives for trading purpose.

1) Foreign currency exchange rate risk

Honda has manufacturing operations throughout the world and exports products and components to various countries. Honda purchases materials and components and sells its products and components in foreign currencies. Therefore, currency fluctuations may affect Honda’s profit and the value of the financial instruments it holds.

F-69

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Foreign currency forward exchange contracts and foreign currency option contracts are used to hedge currency risk of transactions denominated in foreign currencies (principally U.S. dollars).

(Foreign currency exchange rate risk sensitivity analysis)

Sensitivity analysis of Honda’s foreign currency exchange rate risk associated with holding financial instruments as of March 31, 2023 and 2024 is as follows.

The following scenario demonstrates the impact of a 1% appreciation of the Japanese yen against the U.S. dollar on profit before income taxes, holding all variables other than the foreign currency exchange rate constant.

	Yen (millions)
	2023		2024
Impact on profit before income taxes	¥	(2,696)	¥	(4,138)

2) Interest rate risk

Honda is exposed to market risk for changes in interest rates related primarily to its debt obligations and receivables from financial services. In addition to short-term financing such as commercial paper, Honda has long-term debt with both fixed and floating rates. Honda’s receivables from financial services primarily use fixed rates. Interest rate swap agreements are mainly used to manage interest rate risk exposure of receivables from financial services and to match finance costs with finance income. Currency swap agreements used among different currencies, also serve to hedge foreign currency exchange risk as well as interest rate risk.

(Interest rate risk sensitivity analysis)

Sensitivity analysis of Honda’s interest rate risk associated with holding financial instruments as of March 31, 2023 and 2024 is as follows.

The following scenario demonstrates the impact of a 100 basis point rise in interest rates on profit before income taxes, holding all variables other than interest rates constant.

	Yen (millions)
	2023		2024
Impact on profit before income taxes	¥	(2,092)	¥	(24,322)

3) Equity price risk

Honda is exposed to equity price risk as a result of its holdings of marketable equity securities. Marketable equity securities are held for purposes other than trading, and are mainly classified into financial assets measured at fair value through other comprehensive income.

(c) Credit Risk

Honda is exposed to the risk that one party to a financial instrument causes a financial loss for the other party by failing to discharge an obligation. Honda reduces the risk of financial assets other than derivatives in accordance with credit administration rules. Honda reduces the risk of derivatives by limiting the counterparties to major international banks and financial institutions that meet the internally established credit guidelines. 

F-70

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The credit risk is mainly in receivables from financial services. Credit risk of the portfolio of consumer finance receivables can be affected by general economic conditions. Adverse changes such as a rise in unemployment can increase the likelihood of defaults. Declines in used vehicle prices can reduce the amount of recoveries on repossessed collaterals. The finance subsidiaries of the Company manage exposures to credit risk in consumer finance receivables by monitoring and adjusting underwriting standards, which affect the level of credit risk that Honda assumes, pricing contracts for expected losses, and focusing collection efforts to minimize losses. Credit risk on dealer finance receivables is affected primarily by the financial strength of the dealers within the portfolio, the value of collateral securing the financings, and economic and market factors that could affect the creditworthiness of dealers. The finance subsidiaries of the Company manage exposures to credit risk in dealer finance receivables by performing comprehensive reviews of dealers prior to establishing financing arrangements and continuously monitoring the payment performance and creditworthiness of these dealers.

Honda has entered into various guarantee agreements, which mainly consist of loan commitments to dealers and guarantees of bank loans of employees for their housing costs. The finance subsidiaries of the Company maintain unused balances on committed lines to dealers based on loan commitment contracts. Although committed lines have been extended, they will not necessarily be withdrawn, as certain contracts contain terms and conditions of withdrawal that require screening of the obligor’s credit standing. There is risk that dealers fail to discharge withdrawn committed lines and cause financial loss for Honda. Regarding the bank loans of employees for their housing costs, if an employee defaults on his/her loan payments, Honda is required to perform under the guarantee. As of March 31, 2024, no amount has been accrued for any estimated losses under the obligations, as it is probable that the employees will be able to make all scheduled payments.

F-71

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

1) Credit risk exposure

The analysis of the age of receivables from financial services that are past due as of March 31, 2023 and 2024 is as follows:

	Yen (millions)
As of March 31, 2023	Less than 30 days past due		30-59 days past due		60-89 days past due		90 days and greater past due		Total
Consumer finance receivables:
Retail	¥	223,674	¥	55,675	¥	13,185	¥	9,481	¥	302,015
Finance lease		545		118		5		300		968
Dealer finance receivables:
Wholesale		8,929		9		11		18		8,967
Total	¥	233,148	¥	55,802	¥	13,201	¥	9,799	¥	311,950
	Yen (millions)
As of March 31, 2024	Less than 30 days past due		30-59 days past due		60-89 days past due		90 days and greater past due		Total
Consumer finance receivables:
Retail	¥	328,741	¥	74,948	¥	19,722	¥	17,246	¥	440,657
Finance lease		1,499		258		16		481		2,254
Dealer finance receivables:
Wholesale		10,457		51		16		44		10,568
Total	¥	340,697	¥	75,257	¥	19,754	¥	17,771	¥	453,479

The balances of retail receivables included in consumer finance receivables as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	12-month ECL (Stage 1)		Lifetime ECL				Total
As of March 31, 2023			Not credit- impaired (Stage 2)		Credit- impaired (Stage 3)
Consumer finance receivables:
Retail*	¥	4,985,289	¥	356,005	¥	21,966	¥	5,363,260
	Yen (millions)
	12-month ECL (Stage 1)		Lifetime ECL				Total
As of March 31, 2024			Not credit- impaired (Stage 2)		Credit- impaired (Stage 3)
Consumer finance receivables:
Retail*	¥	6,919,715	¥	374,582	¥	36,162	¥	7,330,459

Explanatory note:

* The tables above represent the gross amounts of retail receivables by stages of ECL model since the expected credit losses are measured collectively by our finance subsidiaries and the balances of those receivables are not directly allocated to the risk ratings.

F-72

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Dealerships are assigned an internal risk rating based primarily on their financial condition. At a minimum, risk ratings for dealerships are updated annually and more frequently for dealerships with weaker risk ratings.

The following table shows the balances of dealer finance receivables and loan commitments classified into Group A or B based on the internal risk ratings. Group A includes the dealer finance receivables and loan commitments of dealerships with high credit quality characteristics. Group B includes the dealer finance receivables and loan commitments of remaining dealerships.

The balances of dealer finance receivables and the undiscounted maximum amounts of potential payment for loan commitments by this risk rating as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	12-month ECL (Stage 1)		Lifetime ECL				Total
As of March 31, 2023			Not credit-impaired (Stage 2)		Credit-impaired (Stage 3)
Dealer finance receivables:
Group A	¥	297,885	¥	706	¥	4,612	¥	303,203
Group B		116,156		1,684		123		117,963
Total	¥	414,041	¥	2,390	¥	4,735	¥	421,166
Loan commitments:
Group A	¥	103,858	¥	—	¥	—	¥	103,858
Group B		15,364		—		—		15,364
Total	¥	119,222	¥	—	¥	—	¥	119,222

The undiscounted maximum amount of potential payment for guarantees of bank loans of employees for their housing costs as of March 31, 2023 is ¥5,988 million.

	Yen (millions)
	12-month ECL (Stage 1)		Lifetime ECL				Total
As of March 31, 2024			Not credit-impaired (Stage 2)		Credit-impaired (Stage 3)
Dealer finance receivables:
Group A	¥	527,138	¥	3,403	¥	6,010	¥	536,551
Group B		166,726		3,559		199		170,484
Total	¥	693,864	¥	6,962	¥	6,209	¥	707,035
Loan commitments:
Group A	¥	82,802	¥	—	¥	—	¥	82,802
Group B		9,571		—		—		9,571
Total	¥	92,373	¥	—	¥	—	¥	92,373

The undiscounted maximum amount of potential payment for guarantees of bank loans of employees for their housing costs as of March 31, 2024 is ¥5,034 million.

F-73

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

2) Collateral held as security

The finance subsidiaries of the Company generally hold sold products as collateral for consumer finance receivables. The finance subsidiaries of the Company hold the dealerships’ other assets as collateral in addition to sold products for dealer finance receivables. The extent to which collateral mitigates credit risk is dependent on the value of collateral relative to the outstanding receivables balance at the time of repossession. The estimated fair value of collateral for credit-impaired consumer finance receivables excluding collateral values in excess of carrying amounts as of March 31, 2023 and 2024 are approximately 80% and 80%, respectively, and those for dealer finance receivables are approximately 100% and 100% of the carrying amounts, respectively. The extent to which collateral mitigates credit risk is also dependent on finance subsidiaries’ ability to take possession of the collateral.

(d) Liquidity Risk

Honda raises funds by commercial paper, bank loans, medium-term notes, corporate bonds and securitization of finance receivables and equipment on operating leases. Honda is exposed to the liquidity risk that Honda would not be able to repay liabilities on the due date due to the deterioration of the financing environment.

Exposure to liquidity risk is managed by maintaining sufficient capital resources, a sufficient level of liquidity and a sound balance sheet. Honda meets its working capital targets primarily through cash generated by business operations, bank loans, corporate bonds and commercial paper. Honda funds financial programs for customers and dealers primarily from medium-term notes, bank loans, securitization of finance receivables and equipment on operating leases, commercial paper and corporate bonds.

The unused portions of the credit facility of Honda’s commercial paper and medium-term note programs as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Commercial paper	¥	729,096	¥	900,657
Medium-term notes		3,832,311		1,857,974
Total	¥	4,561,407	¥	2,758,631

Honda is authorized to obtain financing at prevailing interest rates under these programs.

Honda is aware of the possibility that various factors, such as recession-induced market contraction and financial and foreign exchange market volatility may adversely affect liquidity. For this reason, Honda has sufficient committed lines of credit that serve as alternative liquidity for the commercial paper issued regularly to replace debt.

F-74

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The unused portions of the committed lines of credit extended by financial institutions to Honda as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Commercial paper programs	¥	1,306,781	¥	1,461,590
Other		65,299		63,759
Total	¥	1,372,080	¥	1,525,349

Borrowings under those committed lines of credit generally are available at the prime interest rate.

Maturity analysis of financial liabilities

1) Non-derivative financial liabilities

Non-derivative financial liabilities by maturity as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
As of March 31, 2023	Carrying amount		Within 1 year		Between 1 and 5 years		Later than 5 years		Total contractual cash flows
Trade payables	¥	1,426,333	¥	1,426,333	¥	—	¥	—	¥	1,426,333
Financing liabilities		7,665,168		3,410,145		4,074,986		511,254		7,996,385
Accrued expenses		419,570		419,570		—		—		419,570
Other financial liabilities		369,878		87,685		100,800		207,949		396,434
Total	¥	9,880,949	¥	5,343,733	¥	4,175,786	¥	719,203	¥	10,238,722
	Yen (millions)
As of March 31, 2024	Carrying amount		Within 1 year		Between 1 and 5 years		Later than 5 years		Total contractual cash flows
Trade payables	¥	1,609,836	¥	1,609,836	¥	—	¥	—	¥	1,609,836
Financing liabilities		10,163,557		4,379,834		5,875,709		686,075		10,941,618
Accrued expenses		638,319		638,319		—		—		638,319
Other financial liabilities		421,185		117,190		117,172		221,844		456,206
Total	¥	12,832,897	¥	6,745,179	¥	5,992,881	¥	907,919	¥	13,645,979

Other financial liabilities include lease liabilities. Lease liabilities by maturity as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
As of March 31, 2023	Carrying amount		Within 1 year		Between 1 and 5 years		Later than 5 years		Total contractual cash flows
Lease liabilities	¥	315,958	¥	69,297	¥	87,428	¥	185,790	¥	342,515
	Yen (millions)
As of March 31, 2024	Carrying amount		Within 1 year		Between 1 and 5 years		Later than 5 years		Total contractual cash flows
Lease liabilities	¥	332,406	¥	79,012	¥	101,205	¥	187,211	¥	367,428

F-75

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

2) Derivative financial liabilities

Derivative financial liabilities by maturity as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
As of March 31, 2023	Within 1 year		Between 1 and 5 years		Later than 5 years		Total contractual cash flows
Derivative financial liabilities	¥	109,112	¥	137,056	¥	22,787	¥	268,955
	Yen (millions)
As of March 31, 2024	Within 1 year		Between 1 and 5 years		Later than 5 years		Total contractual cash flows
Derivative financial liabilities	¥	121,922	¥	154,387	¥	3,863	¥	280,172

(26) Fair Value

(a) Definition of Fair Value Hierarchy

Honda uses a three-level hierarchy when measuring fair value. The following is a description of the three hierarchy levels:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly

Level 3 Unobservable inputs for the assets or liabilities

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest input that is significant to the fair value measurement in its entirety. Honda recognizes the transfers between the levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

(b) Method of Fair Value Measurement

The fair values of assets and liabilities are determined based on relevant market information and through the use of an appropriate valuation method.

The measurement methods and assumptions used in the measurement of assets and liabilities are as follows:

(Cash and cash equivalents, trade receivables and trade payables)

The fair values approximate their carrying amounts due to their short-term maturities.

(Receivables from financial services)

The fair value of receivables from financial services is measured primarily by discounting future cash flows using the current interest rates applicable for these receivables of similar remaining maturities. Fair value measurement for receivables from financial services is classified as Level 3.

F-76

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Debt securities)

Debt securities consist mainly of mutual funds, corporate bonds, local bonds and auction rate securities.

The fair value of mutual funds with an active market is measured by using quoted market prices. Fair value measurement for mutual funds with an active market is classified as Level 1.

The fair values of corporate bonds and local bonds are measured based on proprietary pricing models provided by specialists and/or market makers and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. Fair value measurements for corporate bonds and local bonds are classified as Level 2.

The subsidiary’s auction rate securities are A to AAA rated and are insured by qualified guarantee agencies, and reinsured by the Secretary of Education and the United States government, and guaranteed at approximately 95% by the United States government. To measure fair value of auction rate securities, Honda uses a third-party-developed valuation model which obtains a wide array of market observable inputs, as well as unobservable inputs including probability of passing or failing auction at each auction. Fair value measurement for auction rate securities is classified as Level 3.

(Equity securities)

The fair value of equity securities with an active market is measured by using quoted market prices. Fair value measurement for equity securities with an active market is classified as Level 1.

The fair value of equity securities with no active market is measured mainly by using a discounted cash flow method, a comparable company valuation method and other appropriate valuation methods. Fair value measurement for equity securities with no active market is classified as Level 3. In addition, in the case that cost represents the best estimate of fair value, fair value for the equity securities with no active market is measured at cost.

Cash flow forecasts and discount rate for the discounted cash flow model and price book-value ratio (PBR) of a comparable company for the comparable company valuation method are used as significant unobservable inputs in the fair value measurement of equity securities classified as Level 3. The fair value increases (decreases) as Cash flow forecasts increase (decrease), discount rate decline (rise) and PBR of a comparable company rise (decline). Such fair value measurements are conducted in accordance with the group accounting policy approved by the appropriate person of authority and based upon valuation methods determined by personnel in accounting divisions of Honda.

(Derivatives)

Derivatives consist mainly of foreign currency forward exchange contracts, foreign currency option contracts, currency swap agreements and interest rate swap agreements.

The fair values of foreign currency forward exchange contracts and foreign currency option contracts are measured by using market observable inputs such as spot exchange rates, discount rates and implied volatility. The fair values of currency swap agreements and interest rate swap agreements are measured by discounting future cash flows using market observable inputs such as interest rates and foreign exchange rates. Fair value measurements for these derivatives are classified as Level 2.

The credit risk of the counterparties is considered in the valuation of derivatives.

F-77

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Financing liabilities)

The fair value of financing liabilities is measured by discounting future cash flows using interest rates currently available for liabilities of similar terms and remaining maturities. Fair value measurement of financing liabilities is mainly classified as Level 2.

(c) Assets and Liabilities Measured at Fair Value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and 2024 consist of the following:

	Yen (millions)
As of March 31, 2023	Level 1		Level 2		Level 3		Total
Other financial assets:
Financial assets measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments	¥	—	¥	29,026	¥	—	¥	29,026
Interest rate instruments		—		151,242		—		151,242
Other		—		—		5,700		5,700
Total		—		180,268		5,700		185,968
Debt securities		43,264		53,634		5,074		101,972
Financial assets measured at fair value through other comprehensive income:
Debt securities		—		26,555		—		26,555
Equity securities		325,318		—		149,820		475,138
Total	¥	368,582	¥	260,457	¥	160,594	¥	789,633
Other financial liabilities:
Financial liabilities measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments	¥	—	¥	95,412	¥	—	¥	95,412
Interest rate instruments		—		141,786		—		141,786
Other		—		5,770		—		5,770
Total		—		242,968		—		242,968
Total	¥	—	¥	242,968	¥	—	¥	242,968

There were no transfers between Level 1 and Level 2 for the year ended March 31, 2023.

F-78

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

	Yen (millions)
As of March 31, 2024	Level 1		Level 2		Level 3		Total
Other financial assets:
Financial assets measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments	¥	—	¥	80,347	¥	—	¥	80,347
Interest rate instruments		—		108,034		—		108,034
Other		—		—		5,806		5,806
Total		—		188,381		5,806		194,187
Debt securities		55,265		63,886		4,542		123,693
Financial assets measured at fair value through other comprehensive income:
Debt securities		—		30,567		—		30,567
Equity securities		407,489		—		115,214		522,703
Total	¥	462,754	¥	282,834	¥	125,562	¥	871,150
Other financial liabilities:
Financial liabilities measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments	¥	—	¥	100,708	¥	—	¥	100,708
Interest rate instruments		—		133,381		—		133,381
Other		—		2,503		—		2,503
Total		—		236,592		—		236,592
Total	¥	—	¥	236,592	¥	—	¥	236,592

There were no transfers between Level 1 and Level 2 for the year ended March 31, 2024.

F-79

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended March 31, 2023 and 2024 are as follows:

	Yen (millions)
For the year ended March 31, 2023	Derivatives		Debt securities			Equity securities
Balance as of April 1, 2022	¥	4,648	¥	4,773		¥	133,038
Total gains or losses:
Profit or loss		678		(136	)		—
Other comprehensive income		—		—			9,156
Purchases		—		—			10,029
Sales		—		—			(1,144	)
Transfer to level 1 due to listing		—		—			(1,551	)
Exchange differences on translating foreign operations		374		437			292
Balance as of March 31, 2023	¥	5,700	¥	5,074		¥	149,820
Unrealized gains or losses included in profit or loss on assets held at March 31, 2023	¥	678	¥	(136	)	¥	—

	Yen (millions)
For the year ended March 31, 2024	Derivatives			Debt securities			Equity securities
Balance as of April 1, 2023	¥	5,700		¥	5,074		¥	149,820
Total gains or losses:
Profit or loss		(723	)		145			—
Other comprehensive income		—			(4,625	)		(47,742	)
Purchases		—			4,625			7,535
Sales		—			(1,156	)		(160	)
Exchange differences on translating foreign operations		829			479			1,408
Other		—			—			4,353
Balance as of March 31, 2024	¥	5,806		¥	4,542		¥	115,214
Unrealized gains or losses included in profit or loss on assets held at March 31, 2024	¥	(723	)	¥	145		¥	—

Explanatory notes:

1. Gains or losses included in profit or loss for the years ended March 31, 2023 and 2024 are included in other, net in finance income and finance costs in the consolidated statements of income.

2. Gains or losses on equity securities included in other comprehensive income for the years ended March 31, 2023 and 2024 are included in net changes in revaluation of financial assets measured at fair value through other comprehensive income under items that will not be reclassified to profit or loss in the consolidated statements of comprehensive income.

F-80

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(d) Financial Assets and Financial Liabilities measured at amortized cost

The carrying amounts and fair values of financial assets and financial liabilities measured at amortized cost as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023				2024
	Carrying amount		Fair value		Carrying amount		Fair value
Receivables from financial services	¥	5,894,752	¥	5,696,283	¥	8,175,270	¥	7,964,497
Debt securities		85,235		85,235		69,751		69,751
Financing liabilities		7,665,168		7,440,205		10,163,557		10,008,013

The table does not include financial assets and financial liabilities measured at amortized cost whose fair values approximate their carrying amounts.

(27) Offsetting of Financial Assets and Financial Liabilities

The offsetting information regarding financial assets and financial liabilities as of March 31, 2023 and 2024 is as follows:

	Yen (millions)
As of March 31, 2023	Gross amounts of recognized financial assets and financial liabilities		Amounts offset in the consolidated statements of financial position		Net amounts presented in the consolidated statements of financial position		Amounts not offset due to not meeting offsetting criteria despite being subject to a master netting agreement or similar agreement			Net Amounts
Other financial assets
Derivatives	¥	185,968	¥	—	¥	185,968	¥	(133,472	)	¥	52,496
Other financial liabilities
Derivatives		242,968		—		242,968		(133,472	)		109,496
	Yen (millions)
As of March 31, 2024	Gross amounts of recognized financial assets and financial liabilities		Amounts offset in the consolidated statements of financial position		Net amounts presented in the consolidated statements of financial position		Amounts not offset due to not meeting offsetting criteria despite being subject to a master netting agreement or similar agreement			Net Amounts
Other financial assets
Derivatives	¥	194,187	¥	—	¥	194,187	¥	(106,133	)	¥	88,054
Other financial liabilities
Derivatives		236,592		—		236,592		(106,133	)		130,459

Generally, the set-off rights on financial instruments that do not meet the offsetting criteria for offsetting financial assets and financial liabilities become enforceable only under special circumstances, such as when the counterparty can no longer fulfill its obligations due to bankruptcy and other reasons.

F-81

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(28) Commitments and Contingent Liabilities

(a) Commitments

Purchase commitments

Commitments for purchases of property, plant and equipment and other commitments as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Commitments for purchases of property, plant and equipment and other commitments	¥	107,865	¥	108,440

(b) Claims and Lawsuits

Honda is subject to potential liability under various lawsuits and claims. Honda recognizes a provision for loss contingencies when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recognized for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel.

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and provision. Punitive damages are claimed in certain of these lawsuits.

After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse significant effect on its consolidated financial position or results of operations.

Loss related to airbag inflators

Honda has been conducting market-based measures in relation to airbag inflators. Honda recognizes a provision for specific warranty costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. There is a possibility that Honda will need to recognize additional provisions when new evidence related to the product recalls arises. However, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report.

F-82

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(29) Structured Entities

Honda considers whether its control over structured entities exists under IFRS 10 “Consolidated Financial Statements”. Honda consolidates structured entities over which it has control, by comprehensively determining whether its control over the entity exists based on any contractual arrangements with such entity as well as the percentage of its voting or similar rights in the entity.

The finance subsidiaries of the Company periodically securitize finance receivables and operating lease assets for liquidity and funding purposes. Securitized assets are transferred to structured entities that are established with the limited purpose of issuing asset-backed securities. The finance subsidiaries of the Company are deemed to have the power to direct the activities of these structured entities that most significantly impact the entities’ economic performance as they retain servicing rights, including the management of delinquencies and defaults of the finance receivables and beneficial interests in operating lease assets. Furthermore, the finance subsidiaries of the Company are deemed to have the obligation to absorb losses and the right to receive variable returns from these structured entities that could potentially be significant to these structured entities by retaining certain subordinated interests of these structured entities. Therefore, the Company is deemed to have substantial control over these entities and consolidates them.

Investors in the asset-backed securities issued by these structured entities do not have recourse to the finance subsidiaries’ general credit with the exception of representations and warranties customary in the industry provided by the finance subsidiaries.

There were no significant unconsolidated structured entities as of March 31, 2023 and 2024.

(30) Related Parties

(a) Related Party Transactions

Honda mainly purchases materials, supplies and services from affiliates and joint ventures, and sells finished goods, parts used in its products, equipment and services to them in the ordinary course of business. Transactions with affiliates and joint ventures are generally made at values that approximate arm’s-length prices.

The balances of receivables and payables with affiliates and joint ventures as of March 31, 2023 and 2024 are as follows:

	Yen (millions)
	2023		2024
Receivables:
Affiliates	¥	95,429	¥	76,290
Joint ventures		340,368		265,992
Total	¥	435,797	¥	342,282
Payables:
Affiliates	¥	207,090	¥	225,706
Joint ventures		67,044		85,023
Total	¥	274,134	¥	310,729

F-83

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The amount of the transactions with affiliates and joint ventures for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Yen (millions)
	2022		2023		2024
Sales revenue:
Affiliates	¥	93,187	¥	125,318	¥	141,323
Joint ventures		1,053,370		942,003		818,607
Total	¥	1,146,557	¥	1,067,321	¥	959,930
Purchase:
Affiliates	¥	1,176,066	¥	1,443,840	¥	1,620,755
Joint ventures		194,321		238,341		442,035
Total	¥	1,370,387	¥	1,682,181	¥	2,062,790

Unrecognized commitment

The Company entered into the joint venture agreement with LG Energy Solution, Ltd. on August 29, 2022 and committed to invest US$1,730 million in L-H Battery Company, Inc., which was newly established and became our affiliate. The commitment under this agreement for the remaining investment as of March 31, 2023 and 2024 is US$1,627 million and US$891 million, respectively.

(b) Compensation to Key Management

Compensation paid to the directors and executive officers of the Company for the years ended March 31, 2022, 2023 and 2024 are as follows:

	Yen (millions)
	2022		2023		2024
Remuneration	¥	696	¥	679	¥	1,209
STI (Short Term Incentive)		188		229		612
LTI (Long Term Incentive)		159		286		453
Total	¥	1,043	¥	1,194	¥	2,274

F-84

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(c) Major Consolidated Subsidiaries

Major consolidated subsidiaries as of March 31, 2024 are as follows:

Company	Country of Incorporation	Function	Percentage Ownership and Voting Interest
Honda R&D Co., Ltd.	Japan	Research & Development		100.0
Honda Finance Co., Ltd.	Japan	Finance		100.0
American Honda Motor Co., Inc.	U.S.A.	Coordination of Subsidiaries Operation, Research & Development, Manufacturing and Sales		100.0
American Honda Finance Corporation	U.S.A.	Finance		100.0
Honda Development and Manufacturing of America, LLC	U.S.A.	Research & Development and Manufacturing		100.0
Honda Canada Inc.	Canada	Manufacturing and Sales		100.0
Honda Canada Finance Inc.	Canada	Finance		100.0
Honda de Mexico, S.A. de C.V.	Mexico	Manufacturing and Sales		100.0
Honda Motor Europe Limited	U.K.	Coordination of Subsidiaries Operation and Sales		100.0
Honda Finance Europe plc	U.K.	Finance		100.0
Honda Motor (China) Investment Co., Ltd.	China	Coordination of Subsidiaries Operation and Sales		100.0
Honda Auto Parts Manufacturing Co., Ltd.	China	Manufacturing		100.0
Honda Motorcycle & Scooter India (Private) Ltd.	India	Manufacturing and Sales		100.0
Honda Cars India Limited	India	Manufacturing and Sales		100.0
P.T. Honda Prospect Motor	Indonesia	Manufacturing and Sales		51.0
Honda Malaysia Sdn Bhd	Malaysia	Manufacturing and Sales		51.0
Asian Honda Motor Co., Ltd.	Thailand	Coordination of Subsidiaries Operation and Sales		100.0
Honda Automobile (Thailand) Co., Ltd.	Thailand	Manufacturing and Sales		89.0
Thai Honda Co., Ltd.	Thailand	Manufacturing and Sales		72.5
Honda Vietnam Co., Ltd.	Vietnam	Manufacturing and Sales		70.0
Honda South America Ltda.	Brazil	Coordination of Subsidiaries Operation		100.0
Moto Honda da Amazonia Ltda.	Brazil	Manufacturing and Sales		100.0

F-85

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(31) Subsequent Event

Acquisition of the Company’s Own Shares

The Board of Directors of the Company, at its meeting held on May 10, 2024, resolved that the Company will acquire its own shares pursuant to Article 459, Paragraph 1 of the Company Law and Article 36 of the Company’s Articles of Incorporation.

(a) Reason for acquisition of own shares

The Company will acquire its own shares for the purpose, among others, of improving efficiency of its capital structure and implementing a flexible capital strategy.

(b) Details of the acquisition

1) Class of shares to be acquired:

Shares of common stock

2) Total number of shares to be acquired:

Up to 180,000,000 shares (3.7 % of total number of issued shares (excluding treasury stock))

3) Total amount of shares to be acquired:

Up to 300,000 million yen

4) Period of acquisition:

Starting on May 13, 2024 and ending on March 31, 2025

5) Method of acquisition:

Market purchases on the Tokyo Stock Exchange

1. Purchases through the Tokyo Stock Exchange Trading Network Off-Auction Own Share Repurchase Trading System (ToSTNeT-3)

2. Market purchases based on a discretionary trading contract regarding acquisition of own shares

(32) Approval of Release of Consolidated Financial Statements

The release of the consolidated financial statements was approved by Toshihiro Mibe, Director, President and Representative Executive Officer and Eiji Fujimura, Director, Managing Executive Officer and Chief Financial Officer on June 19, 2024.

F-86

INDEX OF EXHIBITS

1.1	Articles of Incorporation of the registrant (English translation) *1
1.2	Share Handling Regulations of the registrant (English translation) *2
1.3	Regulations of the Board of Directors of the registrant (English translation) *3
1.4	Honda Motor Co., Ltd. Criteria for Independence of Outside Directors (English translation) *4
2.1	Specimen common stock certificates of the registrant (English translation) *5
2.2	Form of Second Amended and Restated Deposit Agreement dated as of March 2022, among the registrant, JPMorgan Chase Bank, N.A., as Depositary, and holders and beneficial owners of American Depositary Receipts *6
2.3	Form of Amendment No. 1 to Second Amended and Restated Deposit Agreement, dated September 29, 2023, among the registrant, JPMorgan Chase Bank, N.A., as Depositary and holders and beneficial owners of American Depositary Receipts *7
2.4	Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934
8.1	List of Significant Subsidiaries (See “Organizational Structure” in Item 4.C of this Form 20-F)
11.1	Code of Ethics *8
11.2	Guidelines on Insider Information Control and Insider Trading Regulation (English translation)
12.1	Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)
12.2	Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)
13.1	Certification of the chief executive officer required by 18 U.S.C. Section 1350
13.2	Certification of the chief financial officer required by 18 U.S.C. Section 1350
15.1	Consent of Independent Registered Public Accounting Firm
97.1	Policy to Recover Erroneously Awarded Incentive-based Compensation (English translation)
101.INS	Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	The cover page for the Company’s Annual Report on Form 20-F for the year ended March 31, 2024, has been formatted in Inline XBRL

*1 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on June 23, 2021.

*2 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on June 23, 2023.

*3 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on June 23, 2023.

*4 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on June 23, 2021.

*5 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on September 27, 2001. (P)

*6 Incorporated by reference to the registration statement for American Depositary Shares on Form F-6 (File No. 333-263937) filed by JPMorgan Chase Bank, N.A. as depositary, on March 29, 2022.

*7 Incorporated by reference to Post-Effective Amendment No. 1 to the registration statement for American Depositary Shares on Form F-6 (File No. 333-263937) filed by JPMorgan Chase Bank, N.A. as depositary, on September 21, 2023.

*8 Incorporated by reference to the registrant’s Annual Report on Form 20-F filed on July 9, 2004.

The Company has not included as exhibits certain instruments with respect to its long-term debt, the amount of debt authorized under each of which does not exceed 10% of its total assets, and it agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

(P) Paper exhibits

Signatures

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for the filing of Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

HONDA GIKEN KOGYO KABUSHIKI KAISHA (HONDA MOTOR CO., LTD.)
By:	/s/  Toshihiro Mibe
	Toshihiro Mibe Director, President and Representative Executive Officer Chief Executive Officer
Date: June 20, 2024
Tokyo, Japan