Honda ensures commitment to UK plant with £200m investment

Honda Motor Co Ltd., Japans third-biggest auto manufacturer, announced it will invest 200 million pounds in its European flagship facility to prepare it for the production of the next Civic model, ensuring the under-utilized plants medium-term future.

“Honda of the UK Manufacturing (HUM) will become a global production hub for the next generation Civic five door model, as Honda continues to develop its global production network to maximize the efficiency and quality of its manufacturing operations,” the company said in a statement.

The ￡200-million investment will bring advanced production technologies and processes, further enhancing the companys European manufacturing facilities. The Swindon plant will manufacture the Civic five door for the European market, as well as for exports to key global markets. The company said that the skills, knowledge and experience gained since Civic production began at HUM over 20 years ago will help it develop improved economies of scale as the factory specializes in the Civic production.

Output is planned at 120 000 vehicles of the model per year, a company spokesman said, with about half of sales expected to be realized in Europe, while the rest is exported. The plant produced less than 120 000 cars in 2014, well below total capacity of 250 000 units. The latest injection brings cumulative investment to a total of more than ￡2.2 billion since 1985.

“This is incredibly important for HUM and is a reward for the commitment and effort put in by Honda Associates in recent years,” said Jason Smith, Director of HUM.

With the Swindon plant focusing on the production of more Civics, manufacturing of the next generation CR-V will be moved to Honda of Canada Manufacturing (HCM) in Ontario, for export to Europe, the company said. The CR-v was the worlds best selling sport utility vehicle for much of last year.

The changes will not affect jobs, nor production volumes at the UK factory, but come as welcome news almost a year after the auto manufacturer laid off 10% of employees and cut output. Honda has lost positions in Europe to its Japanese rivals Toyota and Nissan, with sales plunging from around 330 000 in 2007 to as little as 142 000 in 2014.

“We will continue to provide high quality products to meet the expectations of our European customers and having just unveiled four new models for the European market, we look forward with renewed optimism and purpose for Honda in Europe,” said Toshiaki Mikoshiba, COO and President of Honda Motor Europe.

Honda Motor Co Ltd closed 2.30% lower at JPY3 903 per share in Tokyo on Tuesday, marking a one-year change of +7.40%. The car maker is valued at 7.22 trillion yen. According to the Financial Times, the 23 analysts offering 12-month price targets for Honda Motor Co Ltd have a median target of JPY4 100, with a high estimate of JPY4 800 and a low estimate of JPY3 100. The median estimate represents a 2.6% increase from the previous close of JPY3 995.