Automotive News Europe - February 2013 - 13

AUTOMOTIVE NEWS EUROPE

AUTOMAKERS

Honda faces tough times
Company’s Europe problems extend beyond market slump, analysts say
NICK GIBBS

ngibbs@crain.com

Honda is cutting jobs in the booming UK auto market because it says there are no signs that Europe’s car sales slump
will end soon. Analysts believe Honda’s problems go beyond
the slump, especially since rival Nissan continues to add
workers and production at its UK factory.
Honda will cut 800 jobs at its plant in Swindon, southern England. It is the first time Honda has cut jobs in the UK since it
began car production there in 1992. The restructuring is essential to “meet the new reality of the car market,” executive
vice president of Honda Europe Ken Keir said in a statement.
He said Honda expected weak sales in Europe over the next
three years. In 2012, European car sales declined for the fifth
consecutive year.
Last year Honda’s European volume dipped 6 percent to
141,019 and its share slipped to 1.1 percent, according to
data from industry association ACEA. That was less than the
market’s overall sales drop of 8 percent, but far from Honda’s
peak of 311,743 sales in 2007, when it had a 1.9 share,
according to ACEA data. That was the last year Honda was
profitable in Europe.

Little help from new models
Industry watchers say Honda’s 2012 sales should have gotten
a boost from the launch of an updated Civic compact and the
all-new CR-V medium SUV, both built in Swindon. “They are
still losing volume with a very young mainstream model range
in the form of the Civic and the CR-V,” IHS Automotive senior
analyst Tim Urquhart told Automotive News Europe. “The
somewhat conservative styling of the Civic is not helping it
stand out in the market or appeal to new customers.”

Industry watchers expected Honda’s 2012 European
sales to rise because of the addition of UK-built models
such as the Civic and CR-V (shown). That didn’t happen.
many countries. Honda doesn’t expect another sales surge.

Nissan rising; Toyota no cuts
In contrast to Honda, Nissan’s UK factory continues to grow.
Last year, Nissan for the first time surpassed annual production of 500,000 in Sunderland, where it makes the Qashqai,
Juke subcompact crossover and Note small minivan. Late last
year, the company announced plans to build the new Infiniti
compact at the factory in northeast England. This will result
in 250 new jobs being added to the 6,000-person work force
and increase production by 60,000 a year starting in 2015.

IHS also believes workers hired for the launch of the CR-V
had to be laid off because of the SUV’s weaker-than-expected
sales. A traditional leader in the medium SUV market, the
CR-V is now battling against cheaper rivals such as the Nissan Qashqai, said Mark Norman, head of automotive intelligence at UK price guide CAP.

Like Honda, Toyota sold fewer cars in Europe last year as its
volume declined 2 percent to 514,840 compared with 2011.
Toyota, however, won’t reduce staff at its factory in Burnaston, central England. “We’re happy with the number we’ve
got,” Nick Freeman, assistant general manager of Toyota Motor Manufacturing UK told Automotive News Europe. “Europe
is our major market so obviously we’ll keep a close eye on it.
The key difference is that we’ve just launched the new Auris
compact so we have some insurance.”

“The big marketplace for crossovers in the UK is sub-20,000
pounds (25,000 euros),” Norman said. “Honda is competing
at 25,000 pounds, and there you’ve got Audi and BMW.”

Last year Toyota’s UK factory, which also makes the mid-sized
Avensis, built 109,502 cars, down from 128,146 in 2011. The
factory capacity is 182,000, Toyota said.

In 2012, Honda sold 37,738 CR-Vs in Europe while Nissan
sold 218,755 Qashqais, according to data from market researcher JATO Dynamics.

Honda’s Swindon factory, which also builds the Jazz subcompact, increased production last year to 165,607 from
97,459 in 2011, according to the firm’s Web site. That is
below the factory’s maximum capacity of 250,000 and far
from its 2008 production peak of 230,000. Swindon’s 66
percent capacity use rate is also below the 75 percent to
80 percent level industry experts say is needed for a factory to break even.

Honda protected UK manufacturing jobs after the financial
crash in 2008 by shutting Swindon for four months. Back
then, Honda expected the European market would bounce
back, which it did because of government-funded subsidies in

FEBRUARY 2013

www.autonewseurope.com

13


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Automotive News Europe - February 2013

Table of Contents for the Digital Edition of Automotive News Europe - February 2013

Automotive News Europe - February 2013
Contents
Van wars
A-OK in the USA
Moving metal
Cutting edge
New arrivals
Unplugged
Home away from home
Hard-hit Honda
Click a mouse, buy a car
Better days
Target in sight
Cutaway
Europe’s big winners
ACEA sales 2012
European sales by model
Russia sales 2012
U.S. sales hit their stride
U.S. sales by model
Global top 25 markets & brands
Shareholder value
Automotive News Europe - February 2013 - Intro
Automotive News Europe - February 2013 - Automotive News Europe - February 2013
Automotive News Europe - February 2013 - Cover2
Automotive News Europe - February 2013 - Contents
Automotive News Europe - February 2013 - Van wars
Automotive News Europe - February 2013 - 5
Automotive News Europe - February 2013 - 6
Automotive News Europe - February 2013 - A-OK in the USA
Automotive News Europe - February 2013 - Moving metal
Automotive News Europe - February 2013 - Cutting edge
Automotive News Europe - February 2013 - New arrivals
Automotive News Europe - February 2013 - Unplugged
Automotive News Europe - February 2013 - Home away from home
Automotive News Europe - February 2013 - Hard-hit Honda
Automotive News Europe - February 2013 - Click a mouse, buy a car
Automotive News Europe - February 2013 - Better days
Automotive News Europe - February 2013 - Target in sight
Automotive News Europe - February 2013 - Cutaway
Automotive News Europe - February 2013 - Europe’s big winners
Automotive News Europe - February 2013 - ACEA sales 2012
Automotive News Europe - February 2013 - European sales by model
Automotive News Europe - February 2013 - 21
Automotive News Europe - February 2013 - 22
Automotive News Europe - February 2013 - Russia sales 2012
Automotive News Europe - February 2013 - 24
Automotive News Europe - February 2013 - 25
Automotive News Europe - February 2013 - U.S. sales hit their stride
Automotive News Europe - February 2013 - U.S. sales by model
Automotive News Europe - February 2013 - 28
Automotive News Europe - February 2013 - 29
Automotive News Europe - February 2013 - Global top 25 markets & brands
Automotive News Europe - February 2013 - Shareholder value
Automotive News Europe - February 2013 - Cover4
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