Honda cuts British car production further due to weak growth outlook

LONDON, March 25 Tue Mar 25, 2014 9:39am EDT

LONDON, March 25 (Reuters) - Japanese automaker Honda unveiled further cuts to its manufacturing operations in Britain on Tuesday, citing disappointing sales growth in Europe which it did not see picking up in the next couple of years.

Honda Motor Europe said it planned to move from a three to two shift pattern at its manufacturing plant in Swindon, southwest England, resulting in an estimated 340 job losses, slightly more than 10 percent of the workforce.

The change means it now expects to produce about 120,000 vehicles in 2014 at Swindon, its hub for European car manufacturing activity, down from 140,094 vehicles in 2013 which was a decrease of about 15 percent from the previous year.

The cuts come as European carmakers struggle to reverse dwindling car sales of the past six years as consumers, particularly in austerity-hit countries, hold back spending.

Ian Howells, senior vice president of Honda Motor Europe, said the company had not seen the growth it had anticipated over the past year.

"With no increase forecasted for the next couple of years, we must scale our manufacturing activity accordingly," Howells said in a statement.

He said the company was confident in the long-term future of the Swindon plant after the restructuring which followed job cuts of 800 last year.

Honda has been making cars at Swindon since 1992, building the Civic, Civic Tourer, CR-V and Jazz models for the British and European markets, and the plant has the capacity to make 250,000 cars a year.

Industry figures for January showed European car sales rose 5.2 percent, boosted by demand from countries which were previously crisis hot spots such as Italy, Portugal and Greece.

Many in the industry hope the slump in car sales will bottom out in 2014 as the sovereign debt crisis abates.

UK car sales in 2013 recorded their best year since 2007, with car registrations rising 10.8 percent on 2012 to 2.26 million vehicles. (Reporting by Julia Fioretti, Editing by Belinda Goldsmith)

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