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Honda's decision to close its British car factory has sent shockwaves through the country. It will be the first closure of an automobile plant in the UK in more than a decade. And it delivers a hammer blow to an industry already facing significant problems. Three and a half thousand direct jobs are at risk at the Swindon site, which is responsible for about 1 in every 10 cars made in Britain last year, as well as thousands more among suppliers.
The decision follows a run of bad news in the sector, which has been hit by a slump in demand for diesel motors and weak consumer confidence. Britain's biggest carmaker, Jaguar Land Rover, is cutting thousands of jobs, while Nissan this month reversed a decision to build a new model at its factory in northeast England.
Honda insisted its move had nothing to do with Britain's impending departure from the EU. Instead, the Japanese company spoke of unprecedented change on a global scale in the automotive industry, in particular, the rise of electric vehicles. It said the Swindon plant in southwest England lacked the adequate scale and market size necessary for new investments. Nevertheless, Brexit loomed large over the decision.
Like other UK carmakers, Honda was warned about the potential disruption to its manufacturing and competitiveness if there is no deal in place at the time of Brexit, which could result in tariffs and customs checks at borders. For now, this is not the death knell for Britain's car industry. But there are serious questions whether it can survive in its current form.