Honda Motor said it will shut its automobile sales operations in South Korea by the end of 2026, closing a 23 year old car franchise while keeping its profitable motorcycle business in the country intact.

The Japanese manufacturer announced the decision on Wednesday through its Seoul-based subsidiary, Honda Korea, citing changes in the global and domestic automobile environment and a need to concentrate resources on mid- to long-term competitiveness. After-sales service, parts supply, and warranty support will continue for existing customers. Honda Korea employs 84 people and is wholly owned by Honda Motor.

The business being wound down has shrunk sharply. Honda sold just 1,951 vehicles in South Korea in 2025, roughly five a day across the country, a 22 percent year on year drop that leaves volumes at less than one sixth of the brand's 2008 peak of 12,356 units, Automotive World reported, noting that the peak year saw Honda become the first imported brand to cross 10,000 annual sales in the country.

At the time of exit, the lineup had narrowed to four models, the Accord, CR-V, Odyssey and Pilot, all imported from Honda's plants in Ohio. Automotive World said the U.S. sourcing left margins exposed to a strengthening dollar against the Korean won, but that competition from local leaders Hyundai Motor and Kia, alongside German premium brands and newer Chinese entrants in the import segment, was the determining factor.

The retreat comes six weeks after Honda disclosed expected losses of up to 2.5 trillion yen, or about ₹1.48 lakh crore, tied to a reassessment of its electrification strategy. That figure is more than twice the group's most recent annual operating profit. The carmaker cancelled the Honda 0 SUV, Honda 0 Saloon and Acura RSX, three electric vehicles planned for North American production, after concluding that launching them into softening EV demand would deepen long-term losses. It also expects an impairment of 110 billion to 150 billion yen (about ₹6,500 crore to ₹8,850 crore) on equity accounted investments in China, where competition from newer EV makers has intensified.

Honda now forecasts an operating loss of 270 billion to 570 billion yen (₹15,930 crore to ₹33,630 crore) for the fiscal year ending March 31, 2026, having earlier projected a 550 billion yen (₹32,450 crore) profit. In the prior year, it posted an operating profit of 1.21 trillion yen (₹71,390 crore) on sales of 21.69 trillion yen (₹12.8 lakh crore), according to its Honda Report 2025. The automobile division alone contributed 243.8 billion yen (₹14,380 crore) in operating profit from 3.72 million units sold.

The company has itself tied part of the slide to Asia. Its March statement flagged "a decline in the competitiveness of Honda products in Asia due to the impact of the allocation of more resources to EV development." Asia accounted for 1.18 million of Honda's automobile sales in the year ended March 2025, the report shows. 

However, the motorcycle division is moving in the opposite direction. Honda sold 20.57 million bikes globally in the year ended March 2025, roughly 40 percent of the world market, generating 663.4 billion yen (₹39,140 crore) in operating profit at an 18.3 percent return on sales, close to triple its profit five years earlier. 

Asia alone delivered 17.48 million of those sales. Honda leads the motorcycle market in Indonesia, Vietnam, Thailand and Brazil, and holds the top spot in five European countries: Italy, Germany, France, Spain and the United Kingdom.

South Korea mirrors that split. The Korea Times reported cumulative motorcycle sales of 420,600 units in the country since Honda entered in 2001, against cumulative automobile sales of 108,600. Honda Korea president Jihong Lee told a Seoul briefing the company would "further concentrate our corporate capabilities" on motorcycles, according to the Seoul Economic Daily, which reported Honda Korea revenue of 334.4 billion won (around ₹2,300 crore) and operating profit of 11.6 billion won (about ₹80 crore) for the fiscal year ended March 2025.

As it pulls back from some Asian car markets, Honda is pushing into others. It is adding 650,000 units of annual motorcycle capacity at its Vithalapur plant in India from 2027, lifting total Indian capacity across four plants to roughly 7 million units. The brand even plans a dedicated electric motorcycle factory there from 2028. On the car side, chief executive Toshihiro Mibe told the Japan Mobility Show last October that Honda will launch at least 10 new models in India by 2030, including seven SUVs. The Honda 0 Alpha SUV, due in India in 2027, will be built locally and exported to Japan and other Asian markets, positioning India as a global production and design hub for the brand.

Honda plans to detail its mid to long-term automobile strategy at a press conference in May. Its dividend forecast for the current fiscal year is unchanged, and the president, executive vice president and several other officers will voluntarily return a portion of their monthly compensation and forfeit short-term performance-linked pay for the year in which the electrification losses are booked.