The news that the next Honda Jazz (Fit) will not be made in the UK will have disappointed suppliers expecting new contracts for a wider Jazz range and higher production volumes post-2014. However, any disappointment at the demise of UK Jazz manufacture is more than balanced by Honda‘s increased commitment to Civic production, with the Civic Wagon and Type R models joining Swindon’s line-up.
Earlier in 2012, Honda took on 500 people to help boost output; recently it announced it was near the end of a £267m (US$335.4m) investment programme. Nonetheless, Honda announced a production slowdown in September, owing to poor European Civic and Jazz sales. At the same time, however, with the new CR-V starting, Honda said it expected to make over 180,000 units at Swindon in the current financial year.
Honda’s decision to concentrate Jazz production in China and Japan…mirrors the UK’s increasing focus on higher value – and thereby potentially more profitable – models
Far from being a negative decision for UK manufacturing, Honda’s decision to concentrate Jazz production in China and Japan is proof of the UK’s centrality to global OEMs’ production strategies, and mirrors the UK’s increasing focus on higher value – and thereby potentially more profitable – models. Notably, the unions are not fazed by the loss of the Jazz, with Unite’s regional organiser, Jim D’Avila, telling local press, “Models come and go…we’ve got no fear of any compulsory reductions.”
Honda’s decision also reveals its manufacturing strategy and the rising importance of scale economies in ensuring the long-term viability of individual factories. Swindon will become more efficient by making a variety of Civics, rather than just one Civic alongside a relatively low volume, lower price Jazz. This decision could finally allow Honda to make a profit from its UK operations. The decision to make the high performance Type R in the UK is symbolically important too: this will be the first case of series production of a high performance Japanese car in Europe.
The decision also says much about UK vehicle production which is an unusual beast in Europe now; while production is falling across the continent (with significant losses for several volume OEMs, amidst rumours of more plant closures), UK production is rising and the industry has received significant recent investment, eg at Mini, JLR and Nissan; these investments have largely been in either premium vehicles (JLR and Mini) or segment-changing models (Qashqai, Leaf, Juke) which have unique positions in their manufacturers’ strategies.
Honda Swindon is better poised to play a global role than it was before – and that can only be good news
The Jazz is currently the only B-segment car made in the UK, a segment in which making profits as a low volume manufacturer in Europe is very difficult. Volkswagen may make money on the much higher volume Polo, but declining sales of the Fiesta, Corsa, and C3 will have contributed to heavy losses at Ford, GM and PSA; the European B-segment fell by 11% H1/2012, with further falls likely in H2. Honda is a bit-part player in this segment, and although Nissan has decided to make a B segment car here from 2014/15, the UK’s move to higher segment (and more profitable) vehicles is clear.
Honda’s decision to focus on the Civic and CR-V mirrors Toyota using its UK factory for the new Auris (previously this was split between the UK and Turkey). The Civic Wagon will also mirror the five-door Civic hatch which is made only at Swindon for global supply. A second Civic variant which will only be made at Swindon will further boost the plant’s export ratio, with exports not limited to the EU, but with worldwide potential. On the back of the decision to stop UK Jazz production, Honda Swindon is better poised to play a global role than it was before – and that can only be good news.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Ian Henry is a director of AutoAnalysis, an independent automotive research and consulting company based in London.
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