Honda is planning to cut 3,100 jobs in its native Japan, as part of a move to slash car production by more than 50,000 vehicles. With the global market in meltdown, Honda is reducing production to avoid ending up with a huge stockpile of unsold vehicles (like the days of British Leyland in the 1970s, when new cars sat around an airfield for six months before anyone bought them). With the likes of Toyota, Nissan and Jaguar Land Rover also announcing job losses and production cuts this week, Europe’s ministers will have much to discuss at their summit today.
Honda, which blamed the cuts on the ‘rapid change in the global market environment, will now make 1.17m cars in the year to March, rather than the 1.3m it was originally planning - it also said today it will shut down production at its plant in Swindon for a whole two months, in April and May. Like many carmakers, it’s already slashed its annual profit forecasts as sales tumble around the world – and despite the odd pocket of resistance (both Jaguar and Mini announced higher sales earlier this week), everyone’s feeling the pain. Not that this has prevented the big boys from cavorting around the Detroit Motor Show boasting about their latest flashy rides this week...
This alarming slump has already prompted a big bail-out package in the US, and EU industry ministers are meeting in Brussels today to discuss whether Europe should follow suit. The idea, apparently, is to discuss the various initiatives being planned at national level and consider EU- level intervention. Protectionist measures look inevitable – France and Germany have already said they’re planning to throw state funds at the industry, while the UK is also mulling some kind of support package. One idea being discussed is a £1,000 cash incentive for people to change their car for a newer model...
But not everyone’s gloomy; for instance, the second-hand market is looking a lot healthier. Car supermarket business Motorpoint tells us that it enjoyed record trading last week, flogging no fewer than 758 cars across its five sites. It’s even selling cars to Irish punters, attracted by the weakness of the pound against the euro. And perhaps there’s a lesson there: if manufacturers were bringing out new cars that were substantially better than the old ones, perhaps more people would be buying them.
Of course, as discretionary purchases go, buying a new car is about a big as they get, so it’s not surprising that people are reluctant to spend. But we’d love for someone to explain to us how it makes any economic, commercial or even environmental sense for national governments to subsidise people replacing their existing car when they don’t need to. Unless you happen to be a big car company, of course...
In today's bulletin:
US doubles up with $140bn Bank of America bailout
Fears fuelled as Honda culls 3,000 jobs
Cooper 'sorry' for Equitable Life
MT's Week in 60 Seconds
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