Honda is preparing to downsize the workforce at its Swindon factory by 800, citing poor demand for its British-built models in Europe. This is the first bad news to affect British car manufacturing in 2013 – following a great performance in 2012.

But the Japanese company’s products are struggling in a European economy that’s being hammered by the effects of the eurozone crisis – and UK-built the Civic, Jazz and CR-V models, are in market sectors most affected by poor sales in southern Europe.

The factory currently employs employs 3500 people, and Swindon management is currently undertaking a 90-day consultation period, which it will try and avoid making compulsory redundancies. In 2012, Swindon made 166,000 cars, which is around 60 per cent of its potential output.

Industry analysts predict that 2013 will be a tough year for sales in Europe as the full effects of the austerity measures being introduced in several economies. The SMMT’s UK sales forecast in 2013 is that it will perform at roughly the same level as 2012.

SMMT chief executive Paul Everitt said: ‘Despite challenges brought by weak European demand, the longer-term prospects for the UK automotive sector remain good, We hope that those affected [by the Honda job cuts] will be able to take advantage of the opportunities we know exist throughout the UK sector and its supply chain.’