Japan’s Honda to continue operations in Turkey
In the latest blow to the U.K., Honda announced it will close its factory in the country in 2021. The Japanese carmaker also said it will stop making Civic models in Britain and Turkey in 2021, but will continue its business operations in Turkey
HAVING announced that it will close its flagship factory in the U.K. in 2021, Honda Motor Co. said yesterday it will also stop making the current Civic sedan model in Turkey. However, it will continue to hold its business operations in the country, Honda Turkey Deputy General Manager Bülent Kılıçer said.
JAPANESE car giant Honda will close its only British car plant in 2021 with the loss of up to 3,500 jobs. This is a major departure of Japanese investment that has been announced just over a month before the U.K. is due to leave the EU.
Besides for the U.K., the company’s global restructuring move also involves Turkey. Honda said yesterday it will stop making the current Civic sedan model in Turkey in 2021 but will continue business operations in the country. The company said its Turkey operations “will continue to hold a constructive dialogue with Turkish stakeholders during this period.”
Following the announcement, Honda Turkey Deputy General Manager Bülent Kılıçer told Anadolu Agency (AA) that Honda is not leaving Turkey and that it plans to continue its operations in the country.
“We are reviewing our global production system and capability by considering the necessity of optimizing production capacity and increasing production efficiency,” Kılıçer said, adding that Turkey operations would focus on the production of electric vehicles.
Kılıçer reiterated that the company would discontinue production of the current Civic sedan at the end of 2021, as Honda President Takahiro Hachigo announced in a news conference earlier yesterday. The decision to halt Civic sedan model production in Turkey has nothing to do with the country’s economic conditions, Kılıçer stressed, emphasizing that Honda has been producing cars in Turkey for 20 years and has achieved very impressive results in car sales over the last few years.
The factory located in Turkey’s northwestern Kocaeli province is Honda’s second automobile manufacturing facility in Europe. The Honda Gebze factory was established on a total area of 292,297 square meters. Honda Turkey currently produces 38,000 units annually.
The Japanese firm, which builds a tenth of Britain’s 1.5 million cars at its Swindon plant, said the move was not related to Brexit and that it needed to focus its activity in regions where it expects to sell most cars, after struggling in Europe.
But the timing of the announcement, just 38 days before Brexit, comes amid deepening Japanese corporate worries about investing in Britain after it leaves the EU.
“This decision was not informed by Brexit,” said Honda Chief Executive Takahiro Hachigo. “We had to consider the rise of electrified vehicles, and the different speeds at which electric vehicles will be taken up in North America and Europe.”
In a statement yesterday, the company cited “unprecedented changes in the global automotive industry” for the decision to shutter the plant by 2021, at the end of the current model’s production cycle.
The decision was a fresh blow to the British economy as it faces its exit from the EU on March 29. Honda makes its popular Civic model at the factory, 115 kilometers west of London, with an output of 150,000 cars per year.
“This is not a Brexit-related issue for us. This decision has been made on the basis of... global changes,” Honda Senior Vice President for Europe Ian Howells told BBC Radio.
“Although we were very clear on our Brexit position, we’ve always seen those as something we will get through,” he said.
He said that China, the U.S. and Japan were where the firm would focus its investments.
British Prime Minister Theresa May spoke to the president of Honda to express her disappointment regarding the decision, May’s spokesman said yesterday.
“She said that she had spoken to the president of Honda to express her disappointment at the decision which is part of a global restructure that Honda is undertaking as it shifts to electric vehicles,” the spokesman told reporters.
U.K. Business Secretary Greg Clark also expressed disappointment over the decision, saying, “The U.K. is one of the leaders in the development of these technologies and so it is deeply disappointing that this decision has been taken now.”
“This is a devastating decision for Swindon and the U.K.,” Clark said. “This is a commercial decision based on unprecedented changes in the global market.”
British businesses are issuing increasingly urgent warnings about the damage being done by the uncertainty around Brexit. The U.K. has yet to seal a deal laying out the divorce terms and establishing what trade rules will apply after Brexit.
For Honda, declining demand for diesel vehicles and tougher emissions regulations has also clouded its manufacturing prospects. The company said in October 2017 it would stop making vehicles at its Sayama plant in Japan by 2022 as it grapples with a shrinking domestic market.
Like many of its global rivals, Honda is trying to streamline its operations as it invests heavily to develop electric vehicles and self-driving cars.
The recently agreed EU-Japan trade agreement means tariffs on cars from Japan to the bloc will be eliminated, while Britain is struggling to make progress on talks over post-Brexit trade relations with Tokyo.