Honda rules out expansion in UK because of failure to join eurozone
Thursday, 24 May 2007
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Honda, the Japanese car manufacturer, has put all future investment plans in the UK on hold following the Government's failure to adopt the European single currency.
Takeo Fukui, the president and chief executive of Japan's third largest car manufacturer, has dashed hopes Honda would expand its Swindon plant, pledging instead to focus on Turkey, where it has a factory. Mr Fukui said Honda had come to realise that it had made a "slight mistake" when it chose to base its European business in the UK in 1992. "We thought that the UK was Europe but they are reluctant to join the euro, which was something we hadn't expected."
Honda had intended to use its Swindon plant to grow its share of the European car market, which at less than 2 per cent compares poorly with its 5 per cent share in the UK and its 11 per cent share in the US.
"We have no plans to expand capacity further in the UK. We might change that if the UK was to join the euro," Mr Fukui said.
Honda's Swindon plant, which makes Civic cars, is already operating at close to full capacity. The Japanese group is one of just a handful of companies still manufacturing cars in the UK.
Mr Fukui said he had given up trying to lobby the Government to change its stance on the euro because he had realised that joining the euro zone was not on the British agenda.
"In the long term they say they will [join] but not in the medium term," he added. "So we have to take that at face value and consider our future strategy based on that assumption."
Honda, which along with Toyota is making the biggest strides in the car industry to reduce its environmental footprint, also said it was planning to launch a new hybrid vehicle.
It currently makes a version of the Civic that runs on a combination of petrol and electric power, but sales of the car have lagged behind those of the Toyota Prius because it has not become associated with green motoring in the same way as the latter car. "We want to regain our position as the number one manufacturer in terms of green image. We see big potential in a new hybrid," Mr Fukui said.
He warned that car manufacturers needed governments to incentivise consumers to buy hybrid cars by cutting taxes on those models. Honda is also working on a car powered by environmentally friendly diesel.
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