Honda today announced that it would build a new manufacturing plant in Mexico. Honda said that the $800 million factory would build fuel-efficient subcompact vehicles for the North American market when it opens in 2014.
The facility will be Honda’s second plant in Mexico and will be located in the Mexican state of Guanajuato. Honda already has four plants in the United States, two in Canada, and two in Mexico. The new plant will have an annual capacity of 200,000 units and is slated to employ 3200 people. Honda expects the new plant to boost its North American production capacity from 1.63 million units to 1.83 million units.
While Honda was mum on exactly what new subcompact would be built at the Guanajuato plant, we believe the Fit is a likely candidate. Honda already builds the Fit at eight different factories around the world, with American-market Fits currently assembled at Honda’s Suzuka factory in Japan. Building the Fit in Mexico for the North American market would help Honda counter the growing strength of the yen to the dollar and reduce the costs of shipping cars from the factory to dealerships, raising profit margins on the hatchback. If Honda does indeed launch production of the Fit in Mexican plant, the Fit will become the smallest car that Honda builds in North America.