Plans for an eighth assembly plant in North America could be shelved by Honda unless a crucial regional trade agreement is extended, according to a top executive at the Japanese vehicle manufacturer. Negotiations are currently underway between the Trump administration, Mexico, and Canada regarding the future of the free trade deal known as the USMCA. Speaking at a media roundtable in Washington, Honda Executive Vice President Noriya Kaihara explained that the company requires an additional factory as its existing North American facilities approach full production capacity.
However, "if there is no USMCA agreement in the future, we may have to change our direction," Kaihara said. He noted that the company will need to make a final decision within one to two years, with the goal of having the facility operational by around 2030. Kaihara stated that Honda is not currently passing tariff expenses along to buyers in North America.
The U.S. placed 50% tariffs on $20 billion worth of Canadian products on Saturday, prompting Canada to announce retaliatory measures effective September 8. Other automakers have expressed similar concerns; Hyundai Motor informed the administration last year that uncertainty surrounding the USMCA was delaying its investment choices. "Early confirmation of USMCA's extension would immediately unlock over $20 billion in new American investments," the automaker said in November.
"Every month of ambiguity slows job creation, site selection and technology development." Surging interest in Honda's hybrid and fuel-efficient vehicles amid sustained high oil prices since the start of the U.S. war with Iran helped the company achieve a 36% rise in car sales, marking its strongest July in seven years. In May, Honda abandoned its long-term electric vehicle sales targets, which included a goal to have EVs represent 20% of its new car sales by 2030. The company now plans to introduce 15 new hybrid models by 2030.
The automaker has also indefinitely suspended its $11 billion EV and battery production project in Canada, and canceled plans for three electric vehicle models meant for the U.S. market. Last year, Honda announced it was moving production of its U.S.-bound five-door Civic hybrid model from Japan to Indiana. Join thought-provoking conversations, follow other Independent readers and see their replies
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