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Honda to close sole UK factory by 2021 to intensify electrification investment

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IFRS 9 Impairment How It Impacts Your Corporation And How We Can Help


Honda to close sole UK factory by 2021 to intensify electrification investment

Honda Motor Co. Ltd. confirmed Feb. 19 that it will shut down its manufacturing operations in the United Kingdom in 2021, a decision it says is aimed at focusing investment capital on electrified powertrain production at higher volume global sites and that it is unrelated to Brexit.

The company said in a statement it was starting consultations with the plant's 3,500 employees at the 150,000 car-per-year factory, which produces the Civic model and previously manufactured the Jazz / Fit, the Accord sedan and CR-V SUV.

Honda will also cease production in Turkey in 2021, where it builds 38,000 Civic cars each year.

"In light of the unprecedented changes that are affecting our industry, it is vital that we accelerate our electrification strategy and restructure our global operations accordingly. As a result, we have had to take this difficult decision to consult our workforce on how we might prepare our manufacturing network for the future," Katsushi Inoue, president of Honda Motor Europe, said in the statement.

Honda described its plans for the Swindon plant as a "proposal." A spokesman for Honda said the company remained open to examining proposals regarding its future in the U.K. but could not specify under what circumstances its plans could be reversed.

Justin Tomlinson, Member of Parliament for North Swindon, on Twitter described the announcement as "devastating news." The politician said that in conversations with Honda and Business Secretary Greg Clark they were "clear this is based on global trends and not Brexit as all European market production will consolidate in Japan in 2021."

Tomlinson added that Honda did not expect to shed jobs or reduce production up until it ceases operations in 2021 and that the government would set up a task force to provide support for staff.

Automakers are under increasing pressure to invest in the development of electrified powertrains as consumers demand more ecologically friendly products and emissions regulations tighten in developed regions. The European Union will introduce penalties for producers who fail to make cuts to car emissions from 2021.

Honda plans to offer electrified powertrains across two-thirds of its range by 2025, the spokesman said.

The trade agreement between the EU and Japan, which came into force Feb. 1, removed tariffs on Japanese cars entering the bloc, reducing the need for the bases in the U.K. that many Japanese automakers set up in the 1980s and 1990s to circumvent import restrictions, Reuters reported.

Honda's announcement is the latest in a series of blows to car manufacturing in the U.K. Japanese rival Nissan Motor Co. Ltd. said Feb. 4 that it had canceled plans to produce the X-Trail SUV in Sunderland, which would have created new jobs in the sector, while Tata Motors Ltd.-owned Jaguar Land Rover and Ford Motor Co. have announced several thousand job cuts at sites around the world, including in the U.K.

Though Honda insists that Britain's imminent departure from the European Union was not a factor in its decision to shutter its Swindon plant, automakers in the U.K. have expressed concern that just-in-time production would likely become impossible in the event of a disorderly Brexit.