Honda to build subcompact cars in Mexico

Honda Motor Co. said Friday it will build an $800 million assembly plant in Mexico to produce subcompact vehicles for the Mexican and North American markets.

The Japanese automaker said the plant is scheduled to begin operation in 2014 with an annual capacity of 200,000 units.

Honda and other Japanese automakers are seeking to relocate car and truck production from Japan because the strength of the yen makes it difficult to make money on exports.

Honda didn't identify the model to be assembled in Mexico, but the only subcompacts the automaker sells in the United States are the Fit, the CR-Z hybrid and the slightly larger Insight hybrid. All three models are now built in Japan.

The new Honda plant will be located in a suburb of Celaya, Guanajuato, about 210 miles east of Honda's two existing plants in El Salto, Jalisco, where the company assembles automobiles, motorcycles and auto parts.

It will be the automaker's eighth auto assembly plant in North America.

Honda said the new plant will increase its automobile production capacity in North America from 1.63 million units to 1.83 million units by 2014.

More than 87 percent of Honda and Acura cars and light trucks sold in America were produced in North America last year.

By David Phillips- Automotive News