Honda cuts production at Swindon as crunch bites

The firm said it would reduce output from the plant by 21,000 vehicles, on top of a previously planned reduction of 10,000 units.

It will close the plant for two months in February and March but insists there will be no job cuts as a result of the reduction.

The company said it still intends to start production of its Jazz model at the plant in autumn 2009 as planned.

Honda has been building cars at Swindon since 1986, and employs about 5000 staff there.

It blames world economic conditions and a lack of consumer confidence for its decision to slash production. New car sales in the UK have slumped in recent months.

British carmakers have approached the government seeking a taxpayer-funded loan to tide them over the problems faced by customers and auto firms in obtaining credit.

Jaguar Land Rover has announced cutbacks at Castle Bromwich in the Midlands and Halewood on Merseyside, while Nissan is slashing production at Sunderland.

Honda is also reducing output by 40,000 vehicles at a Japanese factory, bringing planned domestic production to 1.278 million units this year, down 1% from last year.

The company earlier announced lower production plans for its North American plants. It will produce 18,000 fewer vehicles there in another setback for the already beleaguered US industry. Honda had been the only major motor company to expand its North American output this year.

While in better shape than the embattled US carmakers, Japanese firms have been hit hard by falling demand around the world. They have seen exports collapse as would-be buyers find it harder to get credit.

Honda's sales in the US, its biggest market, fell 25% last month.

The US Congress yesterday dealt a blow to the country's struggling car industry yesterday by adjourning without approving $25 billion (£16.8 billion) in emergency loans despite pleas this week from the industry's top executives.