Honda Motor Co. said Tuesday it will close its British plant in 2021 as it faces severe competition in Europe for electric vehicles, citing a slowdown in its business on the continent.
It said the decision, at a cost of 3,500 jobs, is not due to uncertainty over the terms of Britain's planned March departure from the European Union, rather that it is shifting focus to producing competitive green-energy vehicles in its key markets of the United States and China.
"We determined that it is difficult to enhance our lineup of electrified vehicles in Europe with locally produced products in the region from the perspective of competitiveness," Honda President and CEO Takahiro Hachigo said at a press conference in Tokyo.
Whilst Honda's decision to close its site in Swindon, southern England -- its only European car plant -- is not Brexit related, its Japanese rivals have cited concern over this issue in their recent announcements.
Nissan Motor Co. said it will cancel plans to produce its next-generation SUV at its Sunderland plant in northeastern England, saying it needed to optimize its regional investment strategy, while indicating Brexit obscurity also played a role.
Japan's biggest automaker Toyota Motor Corp. also on Tuesday aired worries about the potential impact of Britain leaving the European Union without a deal on March 29, saying its vehicle plant in Britain may need to suspend operations for between several days and several weeks due to supply disruptions.
Honda said current production at Swindon, with annual output of more than 150,000 units, or some 10 percent of Britain's total auto production, will be transferred to other regions including North America. Its European headquarters in neighboring Berkshire will remain intact.
Of Honda's global vehicle output of 5.03 million units, sales in Europe for the previous fiscal year through March 2018 stood at 183,000 units, down 1,000 from the year before.
The shift in Japanese automakers' strategies comes as they are set to benefit from a free-trade agreement between Japan and the European Union that took effect this month. Under the deal, the bloc will axe 10-percent tariffs on cars imported from Japan in 2027.
Honda also announced Tuesday it will cease Civic sedan production at its plant in Turkey in 2021, as part of global restructuring, although that plant will continue to operate.
Honda began building engines in Swindon in 1989. Its car production lines there became fully operational in 1992.
It said earlier it will stop production at Swindon for six days in April to help prepare for any disruption in parts procurement after Brexit.
Other Japanese companies have also begun to review their British operations.
Sony Corp. plans to transfer a company overseeing home appliance businesses in Europe, from the outskirts of London to Amsterdam by next month, while Panasonic Corp. last year moved its European headquarters and some staff to the Netherlands from Britain.
In the financial sector, Nomura Holdings Inc. and Daiwa Securities Group Inc. have opened offices in Frankfurt in anticipation of a no-deal Brexit.
According to the Japan External Trade Organization, known as JETRO, some 869 Japanese companies operated in Britain as of October 2017, but many are concerned a no-deal Brexit would delay customs procedures and hit their trade operations.
On Jan. 29, Britain's House of Commons voted to reopen negotiations with the European Union over the Brexit deal. The original deal was rejected by the house earlier that month.
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