Honda Executive Discusses Future Factory Plans
A senior executive at Honda has indicated that the Japanese car manufacturer may hold off on constructing an eighth assembly plant in North America unless an important trade agreement is renewed.
The current negotiations between the Trump administration, Canada, and Mexico concern the future of the free trade agreement known as USMCA.
Noriya Kaihara, Honda’s Executive Vice President, shared with journalists during a roundtable in Washington that the company is nearing its maximum production capacity in the region and thus requires a new facility.
However, Kaihara also mentioned that “if there is no USMCA agreement in the future, we may have to change our direction.” He emphasized that a decision needs to be made within the next one to two years, aiming to have the new plant operational by around 2030.
He further noted that Honda is currently absorbing the costs from tariffs instead of passing them onto consumers in North America. Recently, the US imposed a 50% tariff on $20 billion worth of Canadian products, prompting Canada to announce retaliatory measures effective September 8.
Last year, Hyundai Motor communicated to the administration that the uncertainty surrounding USMCA was hindering its investment decisions.
In November, the South Korean auto manufacturer stated, “Early confirmation of USMCA’s extension would immediately unlock over $20 billion in new American investments. Every month of ambiguity slows job creation, site selection, and technology development.”
With rising interest in Honda’s hybrid and other fuel-efficient models—partly fueled by high oil prices since the onset of the US war with Iran—the company experienced its best July in seven years, with car sales climbing by 36%.
Earlier this year, Honda made the decision to indefinitely halt its $11 billion EV project in Canada that was focused on producing electric vehicles and batteries, also canceling three planned EV models for the US market.
Additionally, Honda previously announced it would be shifting the production of its US-bound five-door Civic hybrid from Japan to Indiana.
