I would say it was a clear business decision. Looking back at the situation, here's my take on it:
Back in the 80s, Honda was on a roll. Accords and GoldWings were flying out of the showrooms. There was plenty of opportunity to develop some great projects, like tractors, for the North American market. All this started in Japan, where, at that time, the dollar was VERY strong, about 200 Yen or so. It made perfect sense to develop and manufacture tractors in Japan for the US market. As a lot of the engineers got their start working on Honda racing teams, some of that tech found its way onto tractor projects, like the 4-wheel steer models. How about the "mid-engine" H3011 rider? Pretty awesome, trick stuff, and while it was spendy, it was profitable.
As the dollar started to cool, and more and more production shifted to the USA, Honda elected to develop some riding products in the USA. The first was the H1011. It was offered in three versions (gear/recoil, gear/e.start, hydro/e.start) and about the same time, Honda elected to start selling products to Home Depot. While many of the independent dealers were unhappy, it proved to be a good choice, simply because that's where customers wanted to shop. However, the H1011 was a bit lonesome out there on the showroom floor, up against those large front-engine tractors with bigger decks, metalflake paint, bigger motors, and lower prices. Along come the retro-styled H2013 13hp Honda lawn tractor, and the situation only got worse, along with a dramatic shift in Yen-to-Dollar values.
Keep in mind, Honda has always been an engine company first. So when the new V-twin 18 and 20 hp engines showed up, Honda needed a showcase product for them. Capacity at the domestic plant was full, and Honda had already had a reasonably success with the Bunton and Auburn companies to manufacture the H7013 and H7113 large walk-behind commercial mowers. So, Honda was able to hook up with Deere to make the H4118/20 and get them to market.
Meanwhile, on the commercial side, the ZTR marketplace was heating up fast. I suspect Honda wanted to compete here, but elected not to for whatever reason. The increased demand for ZTR units took away some commercial sales of Honda riders too.
As the currency exchange rates worsened, riding equipment sales at Home Depot never really took off, and the growth of ZTRs by commercial users increased, Honda had little choice but to exit the market. By regrouping, they have been able to focus better on walk-behinds, generators, and have done quite well. That's not to say there will never be any more Honda riding equipment in the USA, of course. Just nothing right now.
FYI, the last riding equipment Honda offered in the USA were the HA4118 and HA4120 lawn tractors, a co-op project where they were built by John Deere at their Horicon, Wisconsin plant. They started off with a John Deere LX173, then Honda designed a re-styled hood, updated anti-scalp rollers, different steering wheel, then dropped in a 18 or 20 hp Honda V-Twin engine. And of course, they changed the paint from Deere green/yellow to Honda red/silver.
Pics:
H3011: 11hp 30" mid-engine rider, hydrostatic drive, made in Japan
H1011: 11 hp 30" rear-engine rider, hydrostatic and 5-speed gear, made in USA
H2013: 13 hp, 36" twin-blade, front-engine, made in USA
H2113: 13hp 36" twin-blade, front-engine, hydrostatic, made in USA
HRC7020: 20 hp, v-twin, 60" deck, twin hydrostatic drive, optional brush and snowblower, made by Bunton, Co, in Louisville, KY
HA4120: 20 hp v-twin, 48" twin-blade, hydrostatic drive, optional snowblower, based on Deere LX173, made by Deere in USA