Honda Europe counts on Civic to help end sales drought

After nearly a decade of falling or stagnant demand, Honda is on track to increase European vehicle sales in 2016 with EU volume rising 25 percent in the first 10 months. A new Civic and a slimmed-down lineup is helping the automaker. Honda’s top executive for the region, Jean-Marc Streng, shared the automaker's plans with Automotive News Europe Correspondent Nick Gibbs.

You sold 132,640 cars in Europe last year. Will you ever reach 300,000 again as you did 2007?

We should reach 160,000 this year. We've set a target of 200,000. My best guess is that we'll reach that in two to three years. The Civic will be a major contributor to that.

Honda's UK plant in Swindon will build the new 10th-generation Civic five-door for export to more than 70 countries. How does replacing a car that was previously only built for Europe with a global car benefit you?

It's great to have this car. Our expectation is to go from 30,000 annual sales [of the Civic] in Europe with the current car to about 50,000 units.

Will the Civic's growth come from the UK or the rest of Europe?

All markets. But the UK is the No. 1 market. We expect it to take 25 percent to 30 percent of this volume.

How many new Civics are U.S. bound?

We will export about 50,000 to the U.S. in the first year.

After that will you grow further?

No, at least not with the current lineup. It's better to have a sustainable, profitable business than just aiming for volume for the sake of volume. I think we are coming to a point where chasing volume has no meaning.

You launched the Civic with two turbocharged gasoline engines. Will you offer a diesel?

We will have a new 1.6-liter unit.

Is it sustainable to carry on investing in a diesel for so few cars?

You're right, the market has really moved toward gasoline much more from a year ago, but the decision to invest in a new diesel was taken three to four years ago. We will have to see what the future will be for the diesel, but it still accounts for more than 50 percent of sales in some markets. Overall, diesel share in the Civic's sector is down to 30 percent, but it's still a sizeable market.

When does production of the CR-V SUV leave the UK?

It will shift to Japan in 2018. The CR-V's volume will be replaced by the Civic for export and increasing sales in Europe. We will have single line production on full capacity at about 160,000.

Swindon still makes the Civic Tourer wagon? Will that car be replaced?

We are thinking about it. When I look at the new Civic I can imagine a nice wagon based on that. But we don't see any urgency. We will carry on with the current Civic Tourer until early 2018.

How has Brexit affected Honda?

Brexit was a change for everybody. Does it affect us? Yes, because the currency fluctuations have been significant. But it's our daily business. We have made a strong commitment to Swindon. It's an investment of 2.2 billion pounds [2.5 billion euros], since the plant opened in 1989. We have invested 200 million pounds to make the new Civic so we are committed to remaining in the UK for the lifecycle of the car, five to six years. Because we are the only factory to make a five-door Civic, our job is to get agreements from other countries to import the car to expand our exports.

Does the weak pound help you?

Overall it's slightly worse because of variances with the U.S. dollar. Our percentage of parts from the UK is about 41 percent, but we import in U.S. dollars.

Is supply better now for the HR-V subcompact SUV from Mexico?

We do have some lead time. So does every successful car. We aim to move from 25,000 [sales] in 2015 to 35,000 this year, so it's a strong increase.

Where are the holes in your European model range?

We have four models – the Jazz [subcompact], Civic, HR-V and CR-V. Do we have room for another? Possibly yes, but I prefer to have more powertrains and gearboxes. We will come back with hybrid and electrification in a few years. I prefer that to having five, six or 10 models. You get a lot of constraint in the logistics chain. So I'm happy with four models.