Honda Motor stock price has remained under pressure this year as it moved into a deep bear market. It has dropped by over 30% and was trading at ¥1,300, its lowest level since August 5. This performance makes it one of the worst-performing stocks in the Nikkei 225 index.
Honda Motor stock price formed a death cross
The daily chart shows that the Honda Motor share price retreated sharply in the past few months.
On the daily chart, the index has formed a death cross pattern as the 200-day and 50-day Exponential Moving Averages (EMA). In most periods, this is one of the most bearish patterns in the market.
The Honda Motor stock price retreated below the key support level at ¥1,325, its lowest level on November 14. It has also crashed below the support at ¥1,332, its lowest level in December last year. This price was the lower side of the head and shoulders chart pattern.
The Honda share price has also dropped below the Ichimoku cloud indicator. Also, the MACD indicator has moved below the zero line, while the Relative Strength Index (RSI) has continued falling and is near its oversold level.
Therefore, the path of the least resistance for the Honda Motor stock price is bearish, with the next point to watch being at ¥1,136, its highest point in August 2022. On the flip side, a move above the resistance at ¥1,400 will invalidate the bearish view.
Honda chart by TradingView
Why Honda shares are falling
Honda Motor share price has crashed because of the ongoing challenges in the automobile industry and its business in China.
China, which has been one of its top markets, is facing substantial challenges as many local brands have gained market share. Some of the most notable car brands in China are Nio, BYD, Li Auto, and XPeng. And recent data shows that China’s vehicle exports have continued growing in the past few months. Honda’s sales in China have retreated by over 30% this year.
The Honda stock price has also dropped because of its late entry into the electric vehicle (EV) industry. While growth in the EV sector continues is slowing, many EV players are gaining market share. Also, its deal with General Motors fell apart. That deal involved manufacturing affordable compact vehicles for the US market.
It has also declined as concerns about Donald Trump won the election and hinted that he will impose tariffs on top imports. Such tariffs would hurt the company because it is one of the top exporters to the US.
The most recent financial results showed that the company’s revenue for the first six months of the year stood at over ¥10 trillion, a 12% increase from the same period. Its operating profit rose by 6.6% to ¥742 billion.
However, the company’s profits dropped by 15.6% to ¥741 million, while its profit attributable to owners fell by almost 20% to ¥494 billion.
Honda Motor estimates that its revenue for the six months to March 2025 will be ¥21 trillion, a 2.8% annual increase. Its operating profit is expected to jump by 2.8% to ¥14 billion, while its profit before taxes will drop by 12.6% to ¥12 trillion.
For starters, while Honda Motor is known for its vehicles, it is a big player in motorcycles and power products. It sold over 5.32 million motorcycles, 910,00 vehicles, and 831,000 power products.
Analysts now believe that Honda may decide to merge or do a joint venture with Nissan Motor, another troubled company. Nissan has said that it was open to have Honda buy the stake owned by Renault, the giant French automaker. Honda Motor stock price has also coincided with that of other companies. Toyota Motor share price has dropped by over 30% from its year-to-date high, while Mazda Motor has fallen by 48%. In Europe, Renault and Stellantis share prices have also collapsed.
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