Honda to Build Assembly Plant in Mexico

Honda Motor Co. announced Monday that it will build a $50-million automotive assembly plant near Guadalajara to produce mid-size sedans for the growing Mexican market and possibly for future export to Latin America.

The 250,000-square-foot plant, to be located next to an existing Honda motorcycle and auto parts factory, will build 15,000 Accord sedans annually.

Mexican law requires companies to build cars in Mexico if they want to sell vehicles in the country. And while that law will be phased out within 10 years under the North American Free Trade Agreement, the Mexican market is expected to grow substantially during that period--and car makers already active in Mexico are likely to grab the largest market share.

“Honda expects this large market to continue to grow and looks forward to being part of the market,” Yoshihide Munokuni, Honda’s executive vice president, said in Mexico City.

Mexico currently has five major auto producers: General Motors Corp., Ford Motor Co., Chrysler Corp., Nissan and Volkswagen. Several others, including BMW and Mercedes-Benz, are expected to build assembly plants there in the next few years.

About 600,000 vehicles are sold in Mexico annually. With the country’s rising incomes and a burgeoning middle class, sales are expected to increase at double-digit rates. Mexico is also seen as a vital staging ground for exports to Central and South America.

Honda said it will not export any vehicles made in Mexico to the United States or Canada. The company’s auto plant in Ohio will provide technical and production support for the facility. Thirty jobs will be created in Ohio as a result, Honda said.

The new plant in Mexico is small by industry standards. It will employ 250 workers and begin production in November, 1995, the company said. Honda is also studying the possibility of doubling annual capacity to 30,000 vehicles, which would boost the work force to 500.