Honda's new Mexico plant will cost £489m to build and will produce 200,000 cars each year

Honda will open a new car-assembly plant in Mexico in 2014 to reduce costs and meet North American demand for small cars.

The $800 million factory (£489m) will produce around 200,000 cars per year, employing 3200 workers from the surrounding Guanajuato area.

The plant will be Honda’s eighth in North America and will add to the company’s existing Mexican production of 60,000 vehicles per year. This brings the total production for Canada, the US and Mexico up to 1.83 million units from the current 1.63 million.

The production facility will “meet the growing need for fuel-efficient, sub-compact vehicles made in North America for the region,” the company said.

Honda's chief financial officer, Fumihiko Ike, told a Japanese newspaper that the strong yen is damaging export profits: “It’s beyond severe,” he said. “None of our exported models are eking out a profit."

The exchange rate is pushing Honda’s rivals into the region as well. Mazda recently announced plans to build a new car factory in Mexico and Hyundai is talking to southern US states about building a new plant.

Sam Naylor

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