Honda Motor Co. Ltd. has postponed plans to build its new small car at its plant in Swindon, England because of the weakness of the euro - but it plans to make up capacity by exporting the next generation CR-V compact sport utility to North America starting in 2002.
Like all British-based manufacturers, Honda is concerned the European currency, which has been steadily getting weaker against the pound, is making the company uncompetitive.
Honda says it is keeping its commitment to Swindon. Construction work currently being carried out will lift production at the plant from 150,000 to 250,000 vehicles a year.
The decision to switch production from the new small car, due at the end of 2002, to the CR-V follows a plan announced in September to export Honda's Swindon-made new Civic three-door model to the Japanese market.
Honda Europe spokesman Chris Rogers said: 'This makes sound business sense. We are struggling with the euro but the yen and the dollar are much stronger currencies.
'We have not canceled plans to build the small car at Swindon.' he said. 'It will initially be sourced from Japan, but Honda's New Manufacturing System gives us the flexibility to switch production around the world at relatively short notice.'
Rogers said production of the current CR-V model at Swindon started within eight weeks of the decision to put production into the plant, demonstrating Honda's speed and flexibility in changing product supply plans on a global scale.
Currently, Honda is implementing its New Manufacturing System in its major plants around the world - including Swindon - to increase the speed, efficiency and flexibility of its global production system. As a result, the next generation CR-V model will be supplied to the North American market both from Japan and the UK. Rogers said: 'Demand for this vehicle in the United States is extremely high and we simply cannot make enough of them.'
In 1999, 135,000 CR-Vs were sold in North America where Honda is selling well over 1 million vehicles a year. It already has three plants there: Maryville and East Liberty in the United States and Alliston in Canada building Acura, Accord, Civic four- and two-door, and Odyssey.
A new plant in Alabama is scheduled to start producing Odyssey exclusively from the end of 2001 at a rate of 120,000 units a year.
CR-V is also performing well in Japan where Honda's Sayama plant is struggling to meet domestic demand.
Expansion at the Swindon plant should be finished in the summer of 2001. The introduction of additional export production will allow Honda's UK manufacturing plant to achieve faster utilization of full capacity.