Honda may reconsider plans for a new production plant in North America if the United States-Mexico-Canada Agreement is not extended, putting a potential 2030 production target under pressure. The automaker says it is nearing full production capacity in the region and needs additional manufacturing space to meet demand.
Honda Ties New Plant Plans to USMCA
Trade agreements play a major role in the global automotive industry, affecting how companies develop, produce and sell vehicles across different markets. Recent U.S. trade policy changes have directly affected the automotive industry, including foreign automakers with established production operations in North America.
Honda, one of the first and longest-running foreign automakers to produce vehicles in North America, has now indicated that its plans for another production facility could depend on the future of the United States-Mexico-Canada Agreement (USMCA).
Automotive News reported that Honda has said it may not build its new production plant in North America unless the trade agreement is extended. The USMCA is currently being renegotiated by Washington, Canada and Mexico.
During a roundtable with media, Honda Executive Vice President Noriya Kaihara said the automaker is very close to reaching full production capacity in North America. As a result, Honda needs another production facility in the region to meet production demand.
However, Kaihara said, “if there is no USMCA agreement in the future, we may have to change our direction.”
Honda ideally needs to decide where the plant will be built by next year at the latest, with a target of having the facility fully operational by 2030.
Rising Demand Adds Pressure on Production
Honda’s production plans come as the automaker experiences higher sales amid rising fuel costs. Increased consumer interest in hybrids has contributed to stronger demand for the brand, which recorded its highest July sales in seven years.
Honda currently operates seven major manufacturing sites in North America. They are located in Ohio, Indiana, Alabama and Georgia.
Hyundai Also Raises Investment Concerns
Honda is not the only automaker to express concerns about continued investment in the United States if the USMCA does not continue.
Hyundai has also experienced a sales increase tied to high fuel costs and has been open about its reluctance to make additional U.S. investments if the trade agreement does not continue.
Hyundai said last November that an early confirmation of the USMCA extension would unlock more than $20 billion in new investments and create more jobs.
For Honda, the future of the USMCA is now tied to a decision on where to build a new North American production facility, as the automaker approaches its existing manufacturing capacity and targets 2030 for the plant to become fully operational.
