Automobile News

The worldwide economic crisis has entailed huge consequences to many big name Japanese automobile manufacturers, such as Toyota and Honda, that are normally resilient in the face of such pressure. Struck by unfavourable economic conditions, sinking demand in North America and Europe, as well as a strong Yen, Japanese carmakers have seen losses pile up and exports plunge. After the typically stalwart Toyota posted its first ever recorded operating loss and opted to cut production, including closing down domestic plants for 11 days, other companies are following suit. The latest cost cutting measure by Honda has hit the UK as well, as the manufacturer opts to shutdown its Swindon plant for a full two months, in addition to cutting domestic production of its automobiles in Japan by 56,000.

Honda had already announced its intentions to close the plant for the months of February and March, as the company has now decided to extend the stop in production into April and May. While the production cuts do entail lower wages for the Swindon plant workers, Honda insists no redundancies for automobile plant workers are on the horizon, and that the measure will in fact safeguard jobs. Workers have nonetheless expressed unease at the move and are afraid of what will happen next. Aside from the removal of 3,100 temporary jobs in Japan, Honda has not made significant cuts to its workforce, which includes 4,200 employees in the UK.

The car sales statistics in Europe are no less reassuring than those in the rest of the world, as December saw car sales in Europe fall by a staggering 17.8%, to an overall 7.8% decline on the year. The yearly decline was the worst in 15 years and the numbers do not bode well for any carmaker, including Honda. The forecast is even more grim in the UK where new car sales fell by 21.1% in December and unemployment recently hit an 11 year high.

Tags for this article: economy, honda, sales, swindon

The World Rally Championship for one is really shattered by the current economic crisis, with the latest setback coming in the form of Subaru who announced that it is no longer a part of the competition. The company cited the on going economic recession as a pretext that forced them to reconsider their Championship future.

This recent development is quite significant as it comes barely a few days after Suzuki withdrew its name from the Championship. Moreover, with the withdrawal of Subaru, the World Rally Championship is now left in the lurch losing two third of its teams in a mere span of 24 hours. The unwanted withdrawal means that Citroen and Ford are the only manufacturers in the FIA WRC competition for next season. This is very problematic for the rally organisation, and if it continues we might not see any more Sega Rally Revo video games, never mind new races. It is important to note that Honda, Japan’s second biggest car manufacturer, made a similar decision to withdraw from the Formula One Championships citing almost similar reasons.

Fuji Heavy Industries (FHI), Subaru’s parent company, President Kyoji Takenaka while making this significant announcement at a news conference commented that the current economic slowdown that spread from the US has left the company with no other alternative but to reassess its primary objectives. He also emphasized that automobile industry, in particular, is hit hard by the recession irrespective of their nationality.

The dynamics and policies of the company need a rethink so that it stands a better chance at surviving the gloomy scenario, he added.

Meanwhile, a statement from the company reiterated that there is no other alternative left to the company rather than to withdraw so as to optimise its management resources and to strengthen further the Subaru brand.

The Formula One season is barely over and here comes the news that Honda Motor Company Ltd no longer wants to be a part of the championship next year. The news is quite stunning as it has created uncertainty over the future of company’s Formula One team, especially its young bunch of drivers who may have to sit out next year, unless of course some one comes forward and resurrects their career.

Honda Motor’s, who proclaimed its decision with immediate effect, has put its Formula One team for sale, but there is also a bounding clause which states that if no buyer is found for the Northants-based team by March, then they will stay away from the competition in the 2009 season.

A cloud of uncertainty therefore looms above the entire team, which is more pronounced in the case of Ross Brawn who only last year made a move from Ferrari to Honda. The same is the case with the other two drivers Jenson Button and Rubens Barrichello who might find themselves without a team to compete for in 2009, consequently making it a low point of their career.

Meanwhile, Honda has clarified that the recent financial crisis is the reason behind the company’s strategic decision, as the company is finding it increasingly difficult to come to terms with dwindling unit sales. As a result it looks like we might unfortunately not get to see Honda in next year’s Formula One Championship Edition on the PS3. Add to that the not so inspiring display by Honda F1, and it is quite logical of the company to take the intelligent step. Takeo Fukui, president Honda Motors, emphasized that keeping in view the current crisis it is imperative of the company to protect its core business and secure long term objectives. He also accepted the reality that it will take some time before the company makes a turn around.