TOKYO — Europe’s loss will be North America’s gain as Honda shutters two assembly plants in a global push to lift factory utilization rates above 100 percent.
When Honda ends production in the U.K. and Turkey in 2021, the carmaker will shift reliance to its U.S. and Canadian plants to meet Civic demand there.
That increased factory responsibility was just one outcome of the European overhaul announced last week here by Honda CEO Takahiro Hachigo. Honda’s Swindon plant in the U.K. makes the Civic hatchback for the U.S. Although U.S. Civic sales were down 14 percent to 325,760 vehicles in 2018, nearly a third of that volume was imported.
“Given our efforts to optimize production allocation and production capacity on a global scale, we have concluded that we will produce the Civic for North America in North America,” Hachigo said.
Honda is reworking its global production footprint for three reasons: to soak up excess capacity, pave the way for electrification and refocus on the global markets where it sells the most vehicles.
Honda has worldwide capacity to turn out 5.4 million vehicles a year. But last year, it sold only 5.24 million, giving it a utilization rate of around 97 percent. The new measures will trim global capacity to 5.1 million, requiring a utilization ratio exceeding 100 percent through overtime, Hachigo said.
Honda also will consolidate production of electrified vehicles into global hubs, including Japan and China, as it gears up to derive two-thirds of its total sales from electrified vehicles by 2030.
“We have decided to carry out this production realignment in Europe in light of our efforts to optimize production allocation and production capacity globally, as well as accelerating electrification,” Hachigo said.
