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Honda to build small cars in Mexico

August 12, 2011 | 10:46 am

Honda plans to spend $800 million building a new automobile plant in Mexico for fuel-efficient subcompact vehicles such as the Fit. Honda Fit

Cars coming out of the factory, which is expected to begin operation in 2014, will be sold in the Mexican and U.S. markets. The plant will be built in a suburb of Celaya, Guanajuato, and have the capacity to turn out about 200,000 cars annually.

The factory will be the eighth Honda auto plant in North America and will increase Honda’s automobile production capacity in North America from the current 1.63 million units to 1.83 million units. Last year, more than 87% of Honda and Acura cars and light trucks sold in America were produced in North America.

“With growing demand for fuel-efficient vehicles, this plant will increase Honda’s ability to meet customer needs for subcompact vehicles from within North America,” said Tetsuo Iwamura, president of American Honda Motor Co. and chief operating officer for Honda’s North America Region. “This new plant will further strengthen the foundation of Honda’s North American business by enabling Honda to more flexibly respond to changing market conditions from within the region.”

Honda believes that demand for fuel-efficient, subcompact vehicles in North America will continue to grow, and this plant will enable the automaker to supply that growth with regional production, which helps insulate it from the ill effects of currency exchange rates.

Analysts say the combination of higher gas prices and more stringent federal fuel-economy standards will make subcompact cars one of the fastest growing segments of the auto industry over the next several years.


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Photo: Honda Fit. Credit: Bloomberg News