Wednesday, 14 June 2017

Honda Swindon's Future Sorted

Is just the Civic model alone enough for the Swindon plant?

Anyone who follows Honda in Europe knows that sales of late have been poor. The make had 2% of the European market in 2007 but so far in 2015 (Jan-Feb), sales are 0.8%. Understandably the Honda plant in Swindon UK was viewed by some as at risk. I personally didn't think so as that just isn't Honda's way. A plan has been confirmed and here it is.

The Jazz model which I think was only for the UK anyway ceases production in a couple of weeks. That was known already. The new information is that the C-RV will also be ending in 2016. That production will be taken up by a Canadian plant that has capacity to meet European demand. This decision was made due to a recent trade deal between Canada and Europe. The Swindon plant will then become exclusively a Civic producer for the next model, with exports beyond Europe.

There are cost savings to be made by this decision. However, having a plant make just one model has the problem of cyclical sales. When a new model is introduced, sales are it their highest. As the model ages, sales fall. With two models in different stages of their cycle, they compensate each other for the ups and downs. With one model the plant has to bear the variances, which at times reduces worker utilisation and therefore profitability.

Honda Swindon can make 250,000 cars per annum. It made 120,000 in 2014 and the plan is to make 120,000 of the new Civic. So this news simply makes certain the car plant's future. It would be nice to think that more of the capacity could be used in some way. Running at under 50% still seems less efficient than it should be.

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