Honda will invest $3bn to build its first new US car plant in two decades, boosting hybrid production as it pins growth hopes on the vehicles’ rising popularity in the second-largest automotive market. The new assembly plant in Ohio will increase US production capacity by a fifth to 1.3mn vehicles a year and create 2,000 jobs once production begins in 2029. The Ohio factory — Honda’s fifth in the US — will be accompanied by investment in existing facilities in Ohio, Alabama and Georgia, aimed at strengthening the production of hybrid cars and their engines and systems.
The investment follows Honda’s May pledge to expand hybrid production in the US after a disastrous EV strategy U-turn led to its first annual loss in 70 years and ¥1.6tn ($10bn) of EV-related losses. Japanese carmakers, led by Toyota, have struggled with US tariffs on imported vehicles and components of 15 per cent, especially for hybrid systems with limited local production. Honda’s strategic pivot has paid off as shares have rallied by 50 per cent, close to a record high, helped by the booming popularity of its motorcycles and hybrid cars.
Its US sales have risen by 5 per cent this year amid strong demand for hybrid versions of its CR-V, Accord and Civic models. Soaring petrol prices triggered by the Iran war have boosted hybrid popularity in the US, while EVs have remained muted after subsidies were removed. CEO Toshihiro Mibe said the company would introduce 15 new models by 2030, primarily targeting North America.
Honda will provide hybrid options on larger SUVs that use a new V6 engine, which the investments will help to manufacture. The $3bn investment is the first major pledge by a Japanese company since the US midterm elections, signalling ongoing confidence in America’s economy and its role as a haven from Chinese competition. Honda is due to report second-quarter results later on Tuesday, expected to show operating profit of ¥249bn ($1.57bn), a 26 per cent increase over the same period a year ago.
Source: Financial Times Companies · Summarized by HeadlinesBriefing