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Honda has confirmed it will close its Swindon car plant in 2021, with the loss of about 3,500 jobs.
The Japanese company made 160,000 Honda Civics in Swindon last year, of which some 90% were exported to the EU.
The decision comes just weeks after Nissan switched plans to build its X-Trail SUV from the UK to Japan.
Car manufacturers have said they are concerned about continued uncertainty surrounding the UK’s post-Brexit relationship with the EU.
The industry has also been hit by falling demand in China and a slowdown in diesel sales.
And a new EU-Japan trade deal will see the EU reducing the 10% duties on Japanese car imports to zero by 2027, meaning there is less need for Japanese manufacturers to have a base in the EU.
In a statement Katsushi Inoue, president of Honda in Europe, said: “In light of the unprecedented changes that are affecting our industry, it is vital that we accelerate our electrification strategy and restructure our global operations accordingly.
“As a result, we have had to take this difficult decision to consult our workforce on how we might prepare our manufacturing network for the future.”
160,000Honda Civic cars built annually at the plant
90%of production exported to the EU and US
1989start of industrial operations
The move comes as several Japanese companies, which have long seen the UK as a good base for access to European markets, plan to cut investment in the UK.
Was the decision driven by Brexit?
The UK is scheduled to leave at 23:00 UK time on Friday 29 March. So far, no deal has been agreed for its exit terms.
Last autumn, Honda said it was committed to UK-based production, regardless of the outcome of Brexit negotiations.
However, the senior vice-president of Honda Europe told the BBC that if the UK left the EU without a deal, it would cost the company tens of millions of pounds.
Ian Howells said quitting the bloc without an agreement would affect the carmaker’s competitiveness in Europe.
In a tweet on Monday, local MP Justin Tomlinson said: “Honda are clear this is based on global trends and not Brexit, as all European market production will consolidate in Japan in 2021.”
Rival Japanese carmaker Nissan cited Brexit uncertainty as one factor in its recent decision to cancel plans to build its X-Trail SUV in Sunderland.
Sony and Panasonic will move their European headquarters to the EU to avoid disruptions created by Brexit.
What about the EU-Japan trade deal?
The EU and Japan recently struck a trade deal which lowers tariffs on both parties’ car exports to zero.
BBC business editor Simon Jack said the trade deal means there is a dwindling rationale to base manufacturing inside the EU.
He said production at Swindon had also been in decline for some time and is currently running at about half its capacity.