The extent of the crisis enveloping the automotive industry has been highlighted by figures showing that vehicle production fell by more than a quarter in the United Kingdom in October.
The grim figures coincided with news that Honda plans to close its plant at Swindon for two months next year and that the United States Congress had vetoed pleas for a $25 billion bail-out of the country’s car industry.
The Society of Motor Manufacturers and Traders’ monthly snapshot revealed that car production at UK plants fell by 25.1 per cent in October while output of commercial vehicles slumped by 41 per cent. Total production for the month was 27.1 per cent down on October 2007 at 127,164 units.
Car production was 0.7 per cent down at 1,295,192 over the ten months to the end of October while year-to-date figures show CV manufacturers 1.1 per cent down at 1,480,833 units.
“The October production figures reflect the rapid reduction in global demand for motor vehicles and we expect to see further reductions in factory output in November and December,” SMMT chief executive Paul Everitt said.
“These figures are evidence of the scale of the challenge facing the industry and underline the need for prompt action in the pre-Budget report to assist the sector in this difficult period.”
The SMMT and the Retail Motor Industry Federation (RMIF) last week sent a joint letter to the Government calling for a range of measures to help the industry. These include allowing car finance companies to tap the special liquidity arrangements set up for the banks; scrapping plans for rises in vehicle excise duty and changes to business car capital allowances. The two bodies also called for national arrangements to enable manufacturers and suppliers access to loans.
Today’s pre-Budget report by Chancellor Alistair Darling will show whether or not the Government is listening to the industry’s pleas unlike in the US, where Congress has refused to throw Detroit a $25 billion lifeline, saying it would be a bail-out too far for taxpayers.
Democrats said they would not consider a deal until the industry finds a convincing plan for rebuilding the once-mighty “industry of industries”. It left the fate of General Motors, Ford and Chrysler in the balance and sent the Dow Jones industrial index to its lowest point for nearly six years.
Back in the UK, Honda is to shut its Swindon factory next February and March in the wake of the “dramatic change” in the market. None of the 4,800 workers will be laid off.
Japan’s second-biggest carmaker, which had already planned 13 non-production days at Swindon next February, joins Mini, Nissan, Land Rover, Jaguar and Toyota in cutting production. It is also scaling back output at two plants in Japan and the United States.
A spokesman said there would be no redundancies at Swindon and workers would still be paid. The plant produces the Civic and CR-V models and is due to start producing the Jazz next autumn.
The company said in a statement: “In addition to 32,000 units production adjustment between December 2008 and March 2009 that had previously been announced, production at Honda of the UK Manufacturing Ltd (HUM) will be further adjusted by 21,000 units.
“This will be achieved by suspending production for 29 days during the months of February and March 2009, combined with 13 non-production days previously planned in this period. Therefore, HUM will stop all vehicle production in February and March 2009. There are no plans for redundancies.”
Honda said it was reducing production at Swindon in the current financial year from the previously-announced 228,000 units to 175,000 units.
Unite regional officer Jim D’Avila said: “The union, staff and the company need to work together to minimise any financial hardship and to find ways to protect pay and long-term job security.
“Unite has meetings scheduled with the company through December in order to seek a solution.”