HONDA has warned that unless its UK component suppliers drop their prices it will turn to European sources because the strength of sterling means it is cheaper to import parts. Honda's parts suppliers are expected to face calls to cut prices by up to 30% and the company expects to import 35% of parts from the Continent, up from 25% last year.

Minoru Harada, chief executive of Honda Motor Europe, said the ideal balance would be a 50:50 split between UK and Europe in the next few years. He said: 'British suppliers are the best because of their location, but we are asking them to be more competitive. We would like to co-operate with them to increase productivity. We need to source more parts from Europe because of the strength of the pound.'