CELAYA, MEXICO – Honda Motor Co. held a groundbreaking ceremony Wednesday for a new factory near Celaya in central Mexico, aiming to start production there in spring 2014.
The factory in Guanajuato state will have output capacity of 200,000 Fit cars, the automaker’s main compact model. Honda plans to build cars there for the United States and Brazil, Latin America’s largest market and one that is expected to continue to grow.
Mazda Motor Corp. has also begun construction of a new factory in Mexico. The plant is in Salamanca, also in Guanajuato, and aims to start production in fiscal 2013. Nissan Motor Co. is planning to establish a new factory in Mexico as well.
The series of moves is partly aimed at dealing with the yen’s high level of appreciation, but concerns have been raised over the hollowing out of Japan’s manufacturing.
The Honda factory will be the automaker’s second in Mexico for full car assembly. The firm, which is investing about $800 million in the facility, said it plans to employ about 3,200 people, most of whom are expected to be new hires.
“We have high expectations for Mexico,” Honda President Takanobu Ito said ahead of the groundbreaking ceremony.
He said Honda picked Mexico for the new factory due to its “promising domestic market and high labor quality” and because a number of auto parts manufacturers are operating there.
“We would like to make this new factory a hub for our operations aimed at global markets,” Ito said.
Ito indicated a plan to build another plant in an adjacent location to boost the production capacity to 400,000 units at the Celaya complex.
“It’s possible, depending on developments,” in the North and Latin American markets, Ito said, referring to the future of production in Mexico. He said Honda may consider assembling compacts or subcompacts other than the Fit if ouput capacity is increased in the futue.
Mexican President Felipe Calderon attended the groundbreaking and said Honda’s presence in Mexico will be a plus for the economy.
With the new factory, Honda’s North American production capacity will grow from the current 1.63 million units to 1.87 million. Honda currently produces the Fit in Japan for the North American market. This production will switch to the new plant.
Honda has chosen Mexico partly because the country is a party to the North American Free Trade Agreement with the United States and Canada. It also has a tariff-free automobile trade pact with Brazil and relatively low labor costs in comparison with the United States.
One source of concern is a recent agreement between Mexico and Brazil that would limit imports of Mexican-made cars into Brazil for the next three years.
“It is likely to affect our business in Latin America but eventually won’t have a big impact,” Ito said, referring to the bilateral accord.
Toyota ups Canada output
Toyota Motor Corp. will boost annual production of its popular RAV4 sport utility vehicle at its plant in Ontario to 200,000 units, an increase of 50,000 SUVs, in 2013 to meet growing North American demand.
The automaker announced Wednesday it will invest roughly ¥6.7 billion in its Woodstock plant. New vehicle sales in the U.S. hit their highest level in four years in February.
Toyota plans to hire about 400 more workers for the plant, which assembles only the RAV4.
“We will continue boosting production in areas where demand exists,” a Toyota official said.