Honda in Swindon pledge despite loss

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The Independent Online
Honda, the Japanese car maker, expects to lose 50bn yen (£284m) in its European operations this year.

Honda, the Japanese car maker, expects to lose 50bn yen (£284m) in its European operations this year but said yesterday it remained committed to its UK plant at Swindon.

The company, which employs 4,000 workers in Britain, said the pound's strength against the euro and the euro's weakness against the yen were the main reasons for the predicted loss for the year ending 31 March. Honda added that UK pricing pressure would add problems in the region. Britain is the only European country where Honda makes cars, but it employs 3,000 workers elsewhere in Europe. Honda has urged Britain join the euro.

"We had initially hoped to turn our European operation to profit in the 2001/2002 year, but such a recovery will be delayed into the next year," said Koichi Amemiya, Honda's executive vice president.

Despite Honda's prediction that it would turn a profit in Europe in 2003, industry analysts said that could take several more years. Honda also announced yesterday a 81.5bn yen write-down in the value of its assets in Europe.

Krish Bhaskar, an analyst at the Motor Industry Research Unit, said: "There's no way [Honda] is going to make profits for the foreseeable future, as long as the pound remains high. The Swindon facilities cannot make a profit in a European context with the pound at current levels."

Honda has announced a plan to restructure in Europe. The Swindon plant will be expanded, its European dealership network will be reorganised and its CR-V model will be exported from Britain to the US.

Honda's full-group profits for the current year were expected to be 230bn yen.

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