“Wrong place, wrong time”: the five reasons why Honda is shutting Swindon

Honda has roughly doubled sales in China - the world’s largest car market - since 2013, but as with many car makers suffered a difficult 2018 as the market declined after years of steady growth. Furthermore, Honda’s reputation was hit hard by a quality issue with locally made cars that led to months of significant declines.

China is also leading the world for electric car sales, with around 35% electrified car registrations in the world registered in China. More than one million electrified cars were registered in China last year for the first time, and legislation and incentives - largely encouraged in order to lower the country’s dependence on imported oil - will drive that figure ever higher.

Electrification

This was cited by Honda as the primary reason for its withdrawal from Swindon - although critics argue that the investment challenge brought on by evolving technology was long-established and inevitable, irrespective of Swindon’s fate.

Crossman believes Honda’s interpretation was fair, however, saying: “The challenge is enormous and expensive. They are well-set for the long game, with advanced hydrogen fuel cell knowledge, but the interim gap requires enormous investment. That transition is vexing all car companies.”

Japan - EU trade deal

Crossman highlights the deal, signed last year, as weakening Swindon’s position. It kick-starts a process to reduce tariffs on cars brought in from Japan to the European Union from 10% to nothing, in stepped increments over a period of eight years. As a result, had another Civic been signed off for production at Swindon the full tariff-free deal would have been in force for its final years of life.

While Crossman would not comment on specifics that he has no knowledge of, with global sales shrinking and under-utilisation of factories rising as a result in 2018, Honda appears to have taken the decision to retrench to maximise use of its facilities in Japan. 

Brexit uncertainty

Honda specifically said Brexit was not a factor in its decision, and Crossman sees no reason to dispute that. However, he does argue that no business decision would be made without a full assessment of the prevailing business pressures. “They say it is not the reason for the decision - and I believe that - but it is hard not to look at it as a contributory factor. They needed to decide whether to invest in Swindon and the UK at a time when the conditions they would be working in are not clear,” he says. “Uncertainty does not help business.”