Honda will shut down its flagship British Swindon plant by 2021, the Japanese car manufacturer announced on February 19.

The closure means the loss of 3,500 manufacturing jobs at the plant and, according to Honda’s top UK executive Ian Howells, a further 3,500 people working in affiliates could be at risk. In 2018, Honda produced approximately 160,000 cars in the UK, which accounts for 10% of the British car manufacturing output.

Honda is the second Japanese manufacturer that is leaving the UK after Nissan announced in January that it will no longer build its X-Trail sport utility vehicles in Sunderland.

Together, the three Japanese manufacturers – Honda, Toyota, and Nissan – account for 50% of British car manufacturing output.

In 2017 the UK auto-industry manufactured 1.7 million cars and employed 850,000 people, which exported 80% of its output to Europe. However, Japanese manufacturing optimised just-in-time assembly lines in the UK, which will now be unable to operate given the disruption of access to the Single Market.

Honda’s European base in Swindon voted to Leave the EU in the 2016 referendum on EU membership by 54.7% to 45.3%.

Honda will also close its factory in Turkey, where it employs 1,100 people.

The decision coincides with Brexit, although the Japanese carmaker claims that the decision to close its factory n Swindon, west of London, is part of a global restructuring as the company prepares to launch electric vehicles.

“This decision is not related to Brexit,” Honda’s CEO Takahiro Hachigo told a news conference in Tokyo.

This is the first closure of a Honda factory in its 71-year history. Honda will retain its European headquarters in Berkshire, as well as its Formula One racing engines division in Milton Keynes.

The recent Japan-EU deal means that the third biggest car manufacturer in Japan can repatriate production. Under the trade agreement, the EU has pledged to slash tariffs on cars from 10% to zero by 2027.

In January, Britain’s biggest car manufacturer, Jaguar Land Rover, said it would cut 10% of its workforce due to sluggish sales to China and Europe.

There is little doubt that the whole industry is in transition. However, Brexit seems to divert investment in the next generation of electric vehicles elsewhere. UK company Dyson, a major pro-Brexit donor, decided to build its own electric car manufacturing plant in Singapore rather than the UK.