Honda has secured the future of its factory in Swindon by announcing a £200m investment to produce one of the Japanese carmaker’s most popular vehicles at the site.
The announcement takes promised investment in the UK car industry to more than £1bn in less than a week. On Thursday, Jaguar Land Rover said it would spend about £600m at its West Midlands operations, including £400m to support manufacture of the Jaguar-XF at Castle Bromwich.
On the same day, Geely, the Chinese owner of the London Taxi Company, unveiled plans to spend £250m and create up to 1,000 jobs developing new, low-emission black cabs at a new factory in Coventry.
The Swindon plant, Honda’s only European factory, will make a five-door version of the Civic hatchback when the model is updated. Honda said it would spend money on new production equipment and processes to make Swindon a global manufacturing hub to export the Civic to Europe and other big markets. There will be no increase in production but the factory could hire more workers in future.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said there was no precedent for as much investment in the industry in such a short period.
“It has been a fantastic week for UK automotive. Honda’s decision to build its next generation Honda Civic, a global car in an important and growing segment, here in the UK caps off a record six days – the first time three manufacturers have announced nine-figure investments over such a short period of time,” he said.
Carmakers invested a total of £7bn in the UK in 2013 and 2014 as the UK motor industry boom continued. UK factories produced more than 1.5m cars in 2014 – an increase of 50% over five years and the sector’s best year since 2007, before the financial crisis.
Despite falling living standards over the past few years, sales of cars in the UK have soared, with motorists having taken advantage of low interest rates and personal contract hire plans. As a result, UK demand has helped make up for thin sales in the struggling eurozone.
Honda’s investment decision removes uncertainty hanging over the Swindon factory, which has experienced falling sales and output. The company, which has missed out on much of the UK car boom, cut jobs and production at the underused site a year ago.
“This announcement sends a clear message to our associates and suppliers of the strategic importance that Honda Motor Company places on producing cars at our plant in Swindon,” said the carmaker’s head of European operations, Toshiaki Mikoshiba.
Honda’s sales in Europe more than halved to 142,000 last year from 330,000 in 2007. This was despite £2bn of investment in the Swindon factory since Honda UK Manufacturing launched in 1985.
The plant is operating at about half its full capacity, producing fewer than 120,000 vehicles when it could make 250,000. It employs 3,000 people, down from 5,000 at its peak.
Mikoshiba said Honda had unveiled four new models for the European market and that the company had a “renewed optimism and purpose in Europe”.
Production of Honda’s CR-V off-road model, which was the world’s best-selling sport utility vehicle for much of last year, will move to Canada. Honda thinks production efficiency and the quality of its cars will improve if each factory only makes one model.
