By Rebecca Burn-Callander Thursday, 06 September 2012

UK factory feels 'power of dreams' as Honda invests £267m

The future of Honda's Swindon factory is assured as the Japanese carmaker invests millions to ramp up production.

In Honda’s biggest single UK investment programme for a decade, the Japanese car giant has driven £267m into its Swindon factory, the ‘cornerstone’ of its European operations. Cars and engines manufactured at this site are shipped out to more than 60 countries across Europe, the Middle East, Africa and Australia. And now Honda is looking to put its foot on the accelerator for volumes too.

The Swindon factory is forecast to produce 183,000 cars this year. But Honda is now introducing its new Civic and CR-V cars and manufacturing a new 1.6-litre diesel engine at the site. Within three years, as a result of the additional investment, over 250,000 cars will roll off the production line annually. Some 500 new staff have already been recruited to help up production, bringing the total headcount to 3,500.

Business Secretary Vince Cable was pleased as punch at the news: ‘The investment supports the government's ambition to encourage new investment and exports as a route to renewed growth and a more balanced economy,’ he says. Indeed, between Honda’s investment, Nissan’s £127m spend on its Sunderland plant, and BMW’s £250m investment in the UK over the next three years, the automotive industry has become the darling of UK enterprise.

But not everything is tickety boo under the bonnet. On Tuesday, Vauxhall announced that it was stopping production at its Ellesmere Port and Luton plants for a week from September 24 because of falling European car sales. Many carmakers across the eurozone have also been struggling with excess stock as falling sales fills warehouses with unwanted models.

But at least Honda seems to have avoided the consumer slump. As Dave Hodgetts, managing director of Honda UK, told the BBC, ‘Sales in the UK are up about 10%, so we are in a strong position.’ And, with this latest investment taking Honda’s UK spend to £1.5bn in 25 years, it looks like the Japanese are here to stay.

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