Honda cuts UK car output on weak growth outlook

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LONDON (Reuters) -- Honda unveiled further cuts to its manufacturing operations in the UK, citing disappointing sales growth in Europe which it did not see picking up in the next couple of years.

Honda said it planned to move from a three-shift to a two-shift pattern at its factory in Swindon, southwest England, resulting in an estimated 340 job losses, slightly more than 10 percent of the work force.

The change means Honda now expects to produce about 120,000 vehicles in 2014 at Swindon, its hub for European car manufacturing, down from last year's 140,094 vehicles, which was a decrease of about 15 percent from the previous year.

Honda has been making cars at the UK plant since 1992, building the Civic, Civic Tourer, CR-V and Jazz models for the British and European markets. The factory has the capacity to make 250,000 cars a year.

The automaker has seen its market share in EU and EFTA countries fall to 1 percent from 1.1 percent so far this year. In the first two months, Honda's vehicle sales in the region dropped 10 percent to 18,037, according to figures from industry body ACEA.

Ian Howells, senior vice president of Honda Motor Europe, said the company had not seen the growth it had anticipated over the past year. "With no increase forecast for the next couple of years, we must scale our manufacturing activity accordingly," Howells said in a statement.

He said the company was confident in the long-term future of the Swindon plant after the restructuring that followed 800 job cuts last year.

The latest cuts come as European carmakers struggle to reverse dwindling car sales of the past six years as consumers, particularly in austerity-hit countries, hold back spending.

Many in the industry hope the slump in car sales end in 2014 as the sovereign debt crisis abates. Through two months European the new-car volume is up 6 percent to 1,862,597, according to ACEA figures.

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