Honda Confirms $800 Million Mexico Plant for 2014

MEXICO CITY — Honda will invest $800 million to build subcompact cars and engines at a new plant in Celaya, beginning in 2014. The plant, located about 210 miles from Honda's current facility in El Salto, in the central state of Guanajuato, is expected to assemble the next-generation Fit for North America and Mexico.

With annual production capacity of 200,000 units, the Celaya plant could more than quadruple Honda's output in Mexico. It will also boost Honda's total North America capacity from 1.63 million units to 1.83 million units at eight assembly plants — four in the U.S., two in Canada and two in Mexico.

Honda declined to specify which vehicle would be assembled at the Celaya plant, other than to say it would produce "fuel-efficient subcompact vehicles for the Mexican and North American markets."

Honda's Celaya plant will be situated about halfway between rival Nissan's two Mexican assembly plants, in Aguascalientes and Cuernavaca, so it should be able to tap into a well-established network of component suppliers.

American Honda President Tetsuo Iwamura said, "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."

Honda plans to add the Fit Hybrid and the Fit Electric to its rapidly expanding small-car portfolio. The current Fit is slated to be redesigned in 2014.

Inside Line says: Honda says that more than 87 percent of the cars and trucks it sells in North America are produced locally. The new plant could boost that to more than 90 percent.