Prepared remarks
Thank you very much for taking time out of your busy schedule to attend our briefing today. We would now like to start Honda Motor Company Limited's financial results briefing for the third quarter of the fiscal year ending March 2026. First of all, allow me to introduce the attendees today. Mr. Noriya Kaihara, Director, Executive Vice President and Representative Executive Officer.
Good to see you, everyone.
We have Mr. Eiji Fujimura, Director, Managing Executive Officer.
Thank you.
And Mr. Masao Kawaguchi, Operating Executive Head of Accounting and Finance Unit.
This is Kawaguchi, good to see you, everyone.
Mr. Kaihara will first present the financial results of the third quarter ended December 2025 and the forecast for consolidated results for the fiscal year ending March 2026. Then Mr. Fujimura will present the details. Over to you, Mr. Kaihara.
Thank you very much for your continued support for Honda's activities. I would like to present to you the financial results for the third quarter of the fiscal year ending March 2026. I would like to start with the highlights of the financial results. Our operating profit for the third quarter of the year ending March 2026 was JPY 591.5 billion. Motorcycle operations saw solid global unit sales led by India and Brazil. And in addition, the restriction on ICE vehicles in Vietnam, which was a concern, had only a limited impact on sales compared to our assumption. For results up to the third quarter, we've attained record high unit sales, operating profit, and operating margin. Automobile operations saw declines in profit due to nonrecurring expenses related to EV in addition to the impact from tariffs. Operating cash flow after R&D adjustment, which indicates the resources available for future investments, came to JPY 1.8558 trillion, generating cash on par with the same period last year.
The forecast for the consolidated results for the term ending in March 2026 is operating profit of JPY 550 billion and profit for the year of JPY 300 billion, unchanged from the previous forecast. The impact from tariffs was initially forecast at JPY 450 billion at the beginning of the term, but our prospects are now that it will be reduced to JPY 310 billion. Toward the end of the term, though we expect growth in profit due to yen depreciation, the competitive environment for automobiles in Asia will intensify, requiring incentives. Taking into consideration the uncertain business environment, we are maintaining the previous forecast. Going by business segments, for motorcycle operations, with the tailwind of solid sales in India and Brazil, we continue to aim for 21.3 million units, the highest record sales. For automobiles, we will maintain the forecast of 3.34 million units, unchanged from the last forecast.
The shortage of semiconductor supply experienced in the third quarter now has good prospects for preventing recurrence. On the other hand, we are beginning to see signs of supply risk for other materials such as rare earth metals and memories, and we will closely monitor the situation and take actions as needed. To give you the consolidated results for the third quarter of the year to March 2026, operating profit was JPY 591.5 billion, lower by JPY 548.4 billion compared to the same period last year. Investment earnings due to the equity method was JPY 24.0 billion, higher by JPY 51.3 billion. And the quarter profit attributable to the owner of the parent was JPY 465.4 billion, lower by JPY 339.8 billion. Next, I'd like to cover the forecast for the consolidated results for the term ending March 2026. Compared to the previous forecast, we maintain our forecast of operating profit of JPY 550 billion, and then the profit of the year attributable to the owner of the parent of JPY 300 billion, which is unchanged.
The exchange rate against the U.S. dollar is assumed at JPY 148 for the full year period. Next, for shareholder returns. The forecast for the full year dividend for the fiscal year ending March 2026 is JPY 70 per share, unchanged from the previously published forecast. In addition, the Board of Directors meeting held today has resolved on the cancellation of treasury stocks. We will execute the cancellation of 747 million treasury stocks. So let me explain the details of the financial performance, and Mr. Fujimura is going to explain. Let me start. Regarding cumulative group unit sales for 9 months up to the third quarter year-on-year, for motorcycles, 16.44 million units sold due to the increase in India, Pakistan, and Brazil. For automobiles, 2.561 million units due to a decline in Asia, mainly in China. And for the power products business, 2.507 million units sold due to some incremental sales in Europe and decline mainly in Asia.
We have explained the consolidated performance up to the third quarter already. Next, I will explain factors for changes of operating profit year-on-year. Operating profit was JPY 591.5 billion, down by JPY 548.4 billion year-on-year. Factors behind for changes. Sales made a positive impact of JPY 38.1 billion because of the increase in motorcycle unit sales as well as profit in financial businesses, though automobile unit sales declined due to the shortage of semiconductor supplies. Price and cost impacts were positive by JPY 225.9 billion due to effective price revisions. Expenses impact was negative on profit by JPY 108.6 billion. R&D impact negative by JPY 35.7 billion. Foreign currency impact negative by JPY 111 billion. One-time EV-related expenses impact negative by JPY 267.1 billion. And the tariff impact squeezed the profit by JPY 289.8 billion. Excluding one-time EV-related expenses and the tariff impact, the operating profit would be JPY 1.1485 trillion.
Regarding operating profit by business segment. Motorcycle business, JPY 546.5 billion operating profit. Automobile business, JPY 166.4 billion losses. Financial service business, JPY 218 billion profit. And the power products and other businesses, JPY 6.5 billion losses. Operating profit of motorcycle business increased by JPY 44.8 billion year-on-year to JPY 546.5 billion. Factors for changes. Sales impact was positive JPY 61.2 billion due to incremental sales units, mainly in Asia and South America. Price and cost impacts were positive by JPY 48.6 billion due to effective price revisions and so on. The expenses impact negative by JPY 24.1 billion. R&D impact was positive by JPY 4.6 billion. Foreign currency impact negative by JPY 37.7 billion. And tariff impact negative by JPY 7.7 billion. Operating profit of automobile business went down by JPY 569 billion year-on-year, resulting in the operating losses of JPY 166.4 billion.
Breakdown of factors for changes. Sales had a negative impact of JPY 82.8 billion due to unit sales decline, mainly due to the semiconductor supply shortage, losses associated with the reorganizing of the affiliated company of the group and so on. Price and cost impacts had a positive impact of JPY 177.3 billion due to effective price revisions. Expenses had a negative impact of JPY 11.7 billion. R&D impact, negative by JPY 42.1 billion. Foreign currency impact negative by JPY 62.9 billion. One-time EV-related expenses had a negative impact of JPY 267.1 billion. And the tariff impact was negative by JPY 279.5 billion. Cash flow situations now. Free cash flows, excluding financial service business, was JPY 917.4 billion. Net cash as of the end of the third quarter was JPY 3.1707 trillion and the operating cash flows after R&D adjustment was JPY 1.8558 trillion. Let me explain the consolidated forecast for FY ending March 2026.
Regarding group unit sales, we will keep the previous forecast of 21.3 million units of motorcycles, 3.34 million units for automobiles, and 3.67 million units for power products volume. And we have already explained the consolidated financial forecast for FYE March 2026. As for factors for changes in operating profit year-on-year for those forecasts, operating profit would be down by JPY 663.4 billion year-on-year. With factors for changes, sales would have a negative impact of JPY 162 billion due to semiconductor supply shortage and so on. Price and cost impact will be positive by JPY 230 billion due to effective price revisions and so on. Expenses impact, JPY 106.5 billion negative. R&D impact, JPY 166 billion negative. Foreign currency impact, JPY 149 billion negative. And the tariff impact negative by JPY 310 billion. Regarding factors for changes in the forecast of the operating profit, we will keep the previous forecast of the operating profit, for which sales impact will be negative by JPY 10 billion.
Expenses impact negative by JPY 15 billion. R&D expenses impact negative by JPY 40 billion. And foreign currency will make a positive impact by JPY 65 billion due to the change of the exchange rate assumption to JPY 148 for $1. Expected capital expenditures, depreciation, amortization, and R&D spending for the fiscal year ending March 2026 will reflect an increase in CapEx for acquiring factory buildings and other needs for the battery production joint venture with LG Energy Solution. Additionally, I want to discuss the future direction of our operations considering the current business environment. For our automotive operations, our accumulated expertise in internal combustion engines and hybrid technologies has been validated by our third-quarter results, which show that we continue to maintain business characteristics that generate profit, barring the nonrecurring effects from electric vehicles and tariff impacts.
On the other hand, we are faced with issues, including stagnated growth of the EV market, less stringent environmental regulations in different country markets, retreat of the multilateral free trade system due to protectionist policies, heightened supply chain risk due to expansion of global procurement, further exacerbated by intensifying global competition from emerging OEMs. Thereby, we need to conduct a fundamental review of our strategies to rebuild our competitive strength. In this situation, we believe that our current tasks are to build lean business characteristics to enable flexible actions against the changing business environment and to realize product features and cost competitiveness that overwhelm those of emerging OEMs. To address those issues, firstly, we are working to completely settle, within this fiscal year, the losses related to EVs currently sold in North America.
In addition, we are striving to make prompt management decisions in line with EV markets, such as disciplined expenditure control, EV product range and review of CapEx plans aligned with the business environment. At the same time, to further enhance the earning capability of hybrid models, we are preparing to launch the next-generation hybrid system, as well as equipping the hybrid models with next-generation ADAS. We will communicate our review of the fundamental medium- to long-term strategy at an appropriate timing sometime during the coming fiscal year. Honda has multiple business domains, including motorcycle and finance business operations, forming a well-balanced business portfolio, each of which helps us to generate cash flow and to maintain a sound balance sheet. Because of this, we have adopted a DOE indicator, which allows us to ensure stable returns and dividends aligned with the company's growth even in an uncertain and extremely volatile business environment.
Through these initiatives, we will continue to strive to enhance corporate values so that we will remain a company expected to exist in the eyes of our stakeholders. This completes my presentation. I thank you very much for your attention.
Questions and answers
Thank you very much for your attention. So now we'd like to take questions from the audience. Then the first question. This is from Mr. Yokoyama of Toyo Keizai.
This is Yokoyama from Toyo Keizai. Can you hear me?
Yes.
I have 2 questions. First question is I just would like to check your outlook for the full year. You are progressing beyond your budget already. But it is true that the fourth quarter, you tend to get a lot of expenses, but you have been saying that the expenses would be JPY 650 billion for the full year. There was one gap. So I just wanted to check that. And then for automobile profitability, I would just like to check. There was tariffs impact. If we exclude that, that would be IOS of 3.6%. But if you include hybrid, I think earlier, you mentioned like 8% of profitability. So if you say 3.6%, I thought it was kind of sounds lower. So I would like to ask for your evaluation of the profitability of automobiles and then would like to see what your real values are.
Okay. Thank you very much for your question, Mr. Yokoyama. First of all, for the specific numbers for that, this will be covered later. But this time, for the fourth quarter, we slided the results from the fourth to third quarter. So let me try to answer how we expect the financial results would land toward the end of the year. So compared with the third quarter results, the tariff impact will work on the positive side. The motorcycle and automobile unit sales in Vietnam were not as negatively impacted as we initially expected. We anticipate a positive outcome for motorcycle sales compared to our budget. However, looking ahead in the North American automobile market, we expect further challenges due to battery electric vehicles, which may complicate sales. As a result, we are considering increasing our incentives. But as a downside, another downside is that so far, we had the BEV with GM.
Well, Mr. Fujimura will explain this later. But we need to do this in negotiation with GM considering the compensation. So depending on how that comes out, we might have a little bit more expenses to be covered. So with that, that is why we're giving those numbers as a forecast. And then as the BEV environment, how it develops, maybe the GHG credit, and then in the finance, we might have our losses from a residual value on the lease. So based on those, we believe we are just assuming for the fourth quarter, the outlook is still maintained. Okay. So I would like to ask Mr. Fujimura to give a little bit more details then.
Okay. Thank you very much for your questions, Mr. Yokoyama. As you mentioned, the negative JPY 650 billion. So far, we had a battery EV of negative JPY 650 billion, battery EV, that's what we have been saying. So when we talked about the JPY 650 billion, so the GM-related issues that we talked about, and then of the models that we are developing, let's say, we were doing a review of those models so as to write off certain assets. So with that, we recognized JPY 250 billion, and then JPY 400 billion of R&D. So we put a total of JPY 650 billion in the budget. This time, the results pertain not to the GM portion but to models in China. Following discussions with our partner, we have assessed our product lineup and written off certain models or development assets. For the first nine months of this year, we reported JPY 270 billion. If we project this to our budget, it amounts to JPY 290 billion, in addition to JPY 400 billion for R&D. Thus, we are approaching a total of around JPY 700 billion.
These figures are the basis of our budget. The JPY 270 billion has already been incurred, and JPY 290 billion is our forecast for the entire year. The remaining difference of JPY 20 billion is still under negotiation with GM, and we have yet to receive any indication regarding this amount. Therefore, we do not know if JPY 20 billion will be adequate. Considering the sales situation and the potential impact of the exchange rate, we see both upside and downside factors, which is why we are maintaining our forecast. The JPY 700 billion allocated for BEV next year could be reduced to JPY 400 billion if the JPY 200 billion is no longer available. That will be our starting point for the next fiscal year. Ultimately, as Mr. Kaihara mentioned, we need to reassess our strategic framework in light of the current EV market. So are we really going to use this JPY 400 billion as a starting point, or will we review it?
We are uncertain about how much of the disciplined expense cost control will apply, as we are still in the process of formulating those plans. We hope to issue a forecast on that in the future. Regarding ICE, we have earnings close to JPY 900 billion or nearly JPY 1 trillion. However, we are observing declines in unit sales in Asia and some impact from the exchange rate. We are experiencing a slight recovery from the semiconductor impact, even if it is one-time. Without the tariff, that would be JPY 700 billion, and if there were no tariff, it would be JPY 400 billion. So JPY 300 billion tariff impact, it cannot be recovered just immediately next fiscal year. So we want to closely monitor the costs, so we might proceed with more expanding of our local procurement and try to control costs more closely. I hope that answers your question.
Well, when it comes to talks about the upside, you are assuming the exchange rate at JPY 148 per dollar. But I think this would go toward the upside, right?
I think if things progress as things are going right now, yes. As I might have mentioned, so per dollar, JPY 1 would give us an earning plus of JPY 10 billion or so throughout the year, that is, of course. So we slashed up by 4 to get a quarter-on-quarter number per JPY 1 against the dollar fluctuation.
Next question, please, from Asahi Shimbun Newspaper, Mr. Miura, please.
Asahi Shimbun Newspaper, Miura. I have 2 questions. One, Page 20, EV market trends with the model lineup prioritization and focus, as we mentioned here. Could you elaborate on that, please, the basic idea and the directions, please explain about that to me. And another question is also on Page 20 about reorganizing the long and midterm strategies. And please tell us about the directions of those strategies.
Thank you for your question, Mr. Miura. So EV market and our attitude toward that. Basically, the BEV market for us are in North America and in China for North America. The market environment, for instance, there is ACC now validated and credit for BEV, we cannot really see the values anymore today and the demand environment for EV is quite negative today for us. And the recent EV situation today would be leading to the idea of reorganizing the EV strategies for that market. And then last year, we had some tax credits, and we had accelerated some prior to the September period. However, now the market is slowing down in this end. In that regard, EV strategies in the future have to be revisited. And therefore, in the China EV market, for instance, half of the market share in China are supported by the EVs or BEV in China. And then in terms of Honda EVs, unfortunately, there are local EV manufacturers over there.
And in terms of the prices, UI, UX perspectives, we are not there. We are behind those companies. And then in terms of the competition in the software environment, we are still behind other companies. Unfortunately, we do not have the established image of the business in the EV area over there. So we have to go back to scratch and then rebuild our strategies for EV. For the cost perspective, the local suppliers over there or engineering companies over there, we would have to make use of those present that way. We have to turn our direction dramatically so that we can then gain our cost competitiveness utilizing them. NOA, ADAS, those will be updated with them so that we can be competitive again to challenge the markets once again. In that regard, as I mentioned the other day, the timing of the launches will be revisited in order to have our entry once again in the EV market over there.
Next question comes from Nikkei Paper, Mr. Okinaga.
This is Okinaga from the Nikkei Newspaper. I'd like to ask about the EV again. So throughout the year, you said JPY 290 billion for the year. Is there a possibility of, let's say, further impairment booking or posting of impairment losses? So that's one question. And the other question is concerning semiconductor. So you said that you have good prospects for preventing the recurrence of this shortage problem happening. So I just would like to know what you have been doing. And then JPY 150 billion negative for China. So any impact for Japan and China? So I would like to know how the situation has been for China and Japan.
Thank you very much, Mr. Okinaga. First, about the EV, the impairment losses for the nonrecurring one. Well, we don't know what's going to happen, but we have been processing this in accordance with the accounting principles. So whatever we know, we have incorporated into our books. However, as mentioned by Mr. Fujimura, we don't know what kind of compensation issues might come up with GM. So there is a bit of an unclear future prospect. And then actually, as I've explained, because the EV market is dramatically changing. So we would need to monitor our sales volume trends. And then we might have to take some actions if needed. Any details you can add?
Okay. Then if the intention of your question is about the impairment losses for the EV business in general, like at other OEMs, because we are not sure what's happening at other companies, so I would like to refrain from mentioning anything about other companies. But what we are saying is that with the models that we have developed as the die and tooling and then the development R&D assets, some of those have to be written off. And then this is not really impairment, but we would need to do some compensation. So because of the review that we have conducted as a product lineup, we are booking some temporary losses, those expenses that are incurred. But you asked about the impairment, but impairment means that this is a CGU that we use. Whether this leads to cash generation in the future, and then how the business environment has been doing, and what management decision has been in view of those.
And then in view of all of those, we are getting audited, and then with the auditors included, we discuss. So we are not recognizing any impairment like that have happened in other companies. But we have been talking with the accounting. We have been discussing on a continuous basis. And then we have been discussing how we at management should assess those costs and expenses. So I just wanted to mention that whatever that were incurred up until 3 quarters, those are only those associated with the product lineup review. We don't know if it's going to be enough, but we have included whatever we can so far. And then the second question, you asked about semiconductor. So last year, in North America, from the end of October, we had to go into production adjustment and a production suspension in Mexico. So the impact actually is, I think I mentioned, 120,000 units affected. We hope to see some recovery.
We anticipate an impact of 110,000 units, which we estimate will be around JPY 150 billion. Unfortunately, we have experienced some disruptions in production in Japan and China. From China, we experienced about three weeks of impact at the beginning of the year. In Japan, we had to suspend production at Suzuka for two to three days and made some production adjustments for a few days afterward. Despite the initial impact, we believe we have the capacity to recover adequately in both Japan and China. So we will be able to complete the recovery of those lost production before the end of this fiscal year. So in terms of business impact, it is very limited. So we have not considered that into our business. But anyway, we have faced those problems. So basically to the suppliers, so I'd say, we are trying to do multi-sourcing of the suppliers, and then we have been asking them to keep appropriate inventory levels.
However, some of the suppliers, unfortunately, have not provided us with that much of the details. So to be blunt, we have been relying heavily on our suppliers. So that's something we are reviewing fundamentally so that we will keep a close watch over our supply chain all the way up to upstream and then see what kind of risk there may be, and then we will do appropriate risk assessment and then keep appropriate inventory management or go multi-sourcing as well. And then that needs to be done from the development stage as well. So at the earlier development stage, we have been looking at the cost sourcing. Well, in view of that, there are some single-sourcing strategies as well. But in terms of business continuity strategy, if we go single-sourcing, we will pay careful attention to upstream of each of those components containing semiconductor, and then we will decide how much of inventory we will hold.
And then we will do a review about what is going to happen if we go multiple sourcing and then take actions accordingly. Currently, as you may know, there are issues with semiconductors, along with challenges we have faced regarding memory and rare earth materials. We recognize these challenges. At this moment, however, I do not believe there are any immediate problems that we need to worry about. But in the future, of course, well, it is not very clear. So we will work closely together with the suppliers and take actions as needed. However, for the rare earth metals, it is nothing that one single corporate entity can do anything about. As you may know, at the JAMA level, this is being discussed. And also with the governmental agencies included, this needs to be reviewed. So we would like to deepen our collaboration with different entities.
Next question, Ms. Ukita from Yomiuri Newspaper, please.
Ukita from Yomiuri Newspaper. I have 2 questions. One is about tariff impact. Little by little compared to the start of the year, it is coming down. It is down from the JPY 386 billion from the beginning now. And could you tell me more about the reasons behind this? And then the other question is about the sales situation of the automobiles. Your target is there, but it's not achieved. And in order to achieve the target volume of the sales, what are you going to do with the Japan and North American market?
So tariff, Mr. Fujimura is to address.
Thank you very much for your question, Ms. Ukita. And as you said, until last time, a gross impact in the first half was a JPY 385 billion impact expected because of tariff, and the recovery of the cost expected JPY 50 billion. And then JPY 338 billion net impact. And then 110,000 units reduced in the U.S. because of the semiconductor situation. And then including that, JPY 338 billion net actually is because of the foreign exchange and so on, it will be about JPY 360 billion. That's the actual gross and JPY 50 recovery. So the net was JPY 310 billion impact incorporated in the accounting. And then the recovery part, they were realized. Therefore, JPY 310 billion, this is the number finalized, let's say, for this. And what kind of recovery plans are incorporated in the JPY 50 billion? And with the suppliers and others, we had made adjustments looking at the logistics and so forth. And then additional local procurements were progressed as well to achieve USMCA, and we are more confident in achieving that. Plus within U.S. credit, utilization is also to be added. And we scrutinized how far we can incorporate from that, and we had a broad consideration. And then eventually, JPY 50 billion recovery plan is realized into the JPY 310 billion figure.
And as for the sales strategy, let me address that question. For North America, as I mentioned a little earlier, IRA credits were pushed toward the end of the period, and it was included in the BEV drops quite dramatically. Therefore, going forward, it will be staying at a very low level. And then going forward, we have to be focusing on the hybrid brand, taking advantage of the brand to make sure that those models will be selling more. And then as of today, in North America, various companies had the impact of the tariff. And then we were thinking that they will be increasing the selling prices. However, we do not see the dramatic selling price increases. And then we have seen some incentives utilized in the different areas. And then the actual prices are on a decreasing trend, practically speaking. Therefore, we have to use incentives. At the same time, we have to appeal to the hybrid models.
And customers who are looking for the affordable models, the ICE models can be provided. So we try to cater to the needs of the customers to try to get by the situation here. And together with the dealers, we have to do the marketing activities. And we were not really focusing too much. However, in the area of the fleet, which was not really focused before. We have to work on that to sell more cars in the fleet customer field. And Japan, hybrid models, that is very focused in the Japanese market. In Japan, rather than the competition, I think it is more of the customers and how we can include and support those customers. The dealers will make sure that they have a close contact with the customers, for instance, one-on-one strategy, one person looking at one customer, one-on-one strategy to try to satisfy their needs for sure. And that is very down to the ground activity, let's say, but it is what we are up to. And then next year onward, MMC and other campaigns expected to try to maintain the market share or improve the market share with those plans.
The next question comes from NHK, Mr. Yasunaga.
This is Yasunaga from NHK. One question. The rare earth metals supply concern, concerning that explanation. So there is an export restriction on China. Is my understanding correct? And also about the diversification of the supply chain. So for rare earth metal, you have no choice but to rely on China. But what would be your appropriate action in response to this situation?
Okay. Thank you very much, Mr. Yasunaga. For the rare earth metal concern, yes, as you said, currently, rare earth metal, those are subjected to export restrictions from China. But currently, are the exports stopped? No. All we can do is apply for exports, and we do see those exports coming through. But sometimes it just takes some time, a longer time. So if you ask us, can we get the exports coming through as expected, not really. So as you know, rare earth metals, those are used in different various components. If the supply stops, the risk is high. So we need to ensure, as I mentioned, we need to apply without any delay, apply for permission for exports. And then, of course, when it comes to fundamental countermeasure is to go without use of rare earth but that will take a long time for development. So currently, we will take some parts that are difficult to switch over or take a longer development.
All we can do is to simply hold inventory. But currently, we don't have any actual problem in the supply. But how is it going to be in the future? We don't know. It is very uncertain, as I mentioned. So the supply, we need to work closely together with our suppliers, get interviewed them, and then ask them what kind of supply chain our supplier has for the rare earth that's needed for their components. We will continue to explore our long-term solutions. This will focus on the medium term, but we are looking into developing parts and components that do not rely on rare earth materials. For now, our immediate priority is to secure our inventory. And then also secondly, to apply for export permissions in a timely manner. So those are the things that we can do currently. I hope that answers your question.
This rare earth-free components, specifically, what kind of components do you have in mind? And where would be the real critical point?
Well, there are different components, but there are different types of rare earth. So some are used in motors, some used in meters. So for each and every component that uses rare earth, for every one of them, we are looking into what can be done to replace them without rare earth.
Ms. Nagai from TV Tokyo.
Question one about the third quarter alone sales in the period for automobiles. Excluding the automobile sales, you had a reduction of the volume. And excluding the impact by the semiconductor, what is the situation as compared to the expectations in the beginning of the year? And the second question is about Page 20. As Kaihara-san said, the direction of the businesses going forward. You said that it is going to be a dramatic revisiting of that.
Thank you very much, Ms. Nagai, for your question. And 3 months volume, right? That's your question, right? And then volume, you mentioned that the volume had declined for the period year-on-year, I suppose. But for the automobiles, actually, the volume sales increased compared to the plan for the automobile businesses for the third quarter. You're asking about the comparison from last year, correct? In the original plans, we actually exceeded the targets for the third quarter in automobiles. However, compared to last year, there was a decline due to the significant three-year impact of semiconductors and the challenges in the Chinese market for internal combustion engine vehicles. The electric vehicle market is growing in China, while the internal combustion engine market is shrinking, leading to difficult conditions for volume in China. So year-on-year, it dropped. That is about the volume.
And what was the next question? Alliance question, right? And Nissan Alliance. Well, actually, with Nissan, the integration possibility, we do not talk about that at all now. And I have to say that. And another thing is that, as you said now, development costs will be needed in the future, for instance, software, architecture, and so forth require investments. And for the future EVs, batteries, e-axle, if we can commonize those or have a co-development together, that will help reduce the development cost, or cost itself may reduce, thanks to that. However, for those matters, we continue to discuss with Nissan. However, not just Nissan, if it is possible to build a relationship like them with other alternative companies, of course, as long as we can expect win-win results altogether, for those, we will continue to consider other possibilities.
Our next question from Mr. Fujiwara from Nikkan Jidosha Shimbun, Daily Automotive Newspaper.
This is Fujiwara from Daily Automotive Newspaper. I have 2 questions as well. My first question is about the automobile, the factors for press. You had a big contribution from the selling cost that helped to grow your revenues. So I wanted to know what region and what products. And then the second question. This may have been covered by Toyo Keizai's question, but the hybrid volume has grown by about 5% in the third quarter. So I would like to know what kind of contribution this 5% growth of HEV volume in the third quarter?
Okay. Thank you for your questions. This is from year-on-year comparison, I believe. Sorry, the selling price and cost impact that work to the plus, that was for automobiles. There was a bit of a plus in the selling price and cost impact. If we look at the total graph, it's about JPY 60 billion. There was about JPY 40 billion for automobiles, because this is from selling price impact. When we say selling price, per year, at the beginning of the term or in fall, we do go through price hikes. So out of the approximately JPY 40 billion, around half occurs in the United States. For the other regions, those amounts are just distributed according to the volume. The hybrid volume for the third quarter, especially in the United States, is performing well in terms of unit sales. The incentives can be kept relatively low compared to internal combustion engine vehicles, but competitors are entering the hybrid market.
Our favorable conditions won't last indefinitely. We will soon enter a transition period for various models. Competitors will introduce new models, so we may need to increase our incentives. But the hybrid requires relatively lower incentive compared to petrol engines. But in the future, we might have to spend some more incentives in the future. But on the other hand, for the petrol, gasoline engine vehicles, so we do need incentives more than hybrid for ICE. However, if you look at the contents of the components, gasoline engine requires less tariff impact. So in that sense, the petrol engine gasoline engine contribute better. We need to find a good balance between the two groups. Recently, one reason for the decline in transaction prices in the States is that the lower-cost model variants are drawing customers in. Since we offer both gasoline and hybrid options, it's important for us to maintain that balance. And then we need to survive through this transition period between those different models using those good mix.
So due to time, the next question will be the last one for the day. Mr. Tsurumi from Mainichi Newspaper, please.
Earlier, you talked about the alliances with Nissan. And based on the reports, the models in the U.S. with Nissan and powertrain commonization and so forth. You talked about that earlier. And what is the progress today? Are there any updates for us as much as you could share with us? That is all for me.
Thank you for your question. So in conclusion, there is no specific information I can share with you today. But with Nissan, as I said earlier, in many different field areas, we try to explore different possibilities. And as you said, the complementary supply of the models or production, the models from each other. If those are complementary to the other company, we could look for the possibility, and also one company produce a model of cars and then provide or make supplies. We have discussion about it. However, we have not decided on any specific plans yet. We simply continue our discussion. And then as I said earlier, the commonization of software or architectures, such topics are, of course, one of the discussion topics for the development. However, both of us have made progress in individual projects. Therefore, it is not yet the time to make a conclusion yet, but we continue to discuss positively with each other. So once any output or plans are solidified, we will make sure that we will share with you.
Thank you. So now that concludes our press conference for the business performance results. And those materials and handouts are available from our website of Honda. Thank you very much for your participation, everyone. Both of us have made progress in our individual projects. It is not yet the time to draw any conclusions, but we continue to communicate positively with each other. Once we have finalized any outputs or plans, we will ensure to share them with you. Thank you. That concludes our press conference regarding the business performance results. The materials and handouts are available on Honda's website. Thank you for your participation, everyone.