By on July 31, 2011

Japanese carmakers are watching the rising yen and falling dollar with great trepidation. Most have the yen at 80 or above in their plans. Today, the greenback buys just 77 yen. “The soaring yen is forcing major Japanese companies to rethink their assumed exchange rates for the current fiscal year,” writes The Nikkei [sub] today, and adds: “Reviews of assumed rates could also accelerate the transfer of production bases overseas.” Honda does just that.

Honda will produce its Fit subcompact in Mexico when a new car plant is finished in 2014, writes The Nikkei [sub]. The car is currently being made in Honda’s Suzuka factory in Mie Prefecture, Japan. At current exchange rates, Honda makes next to no money on the car.

The plant will have an initial annual capacity of 100,000 units. This comes in addition to an existing plant with an annual capacity of 50,000 units. The capacity can be increased down the road.


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22 Comments on “Honda Fit. Hecho En Mexico...”

  • avatar

    This is great news for Honda. Now maybe they’ll make money on the FIT, and be able to keep it in the lineup…maybe even come out with Diesel and CNG Fits??? They will be as successful with their Mexican Fit as Ford is with their Mexican Fusion.

    • 0 avatar

      lilpoindexter: “This is great news for Honda. Now maybe they’ll make money on the FIT, and be able to keep in in the lineup…”

      Is there a level of concern that the Fit is unprofitable and therefore in danger of being dropped in the USDM?

      I’ve been pushing the message that Nissan needs to get with the program and start building the Cube in Aguascalientes, Mexico alongside the Versa that is produced there, for similar reasons.

      As it is, the Cube isn’t making Nissan much (if any) money on each sale because it is built in Japan. It has already been culled from the EU Nissan lineup. There is rampant speculation over at that the North American market is next, and what a pity that would be. If there were any way to improve on the stellar interior packaging of the Versa, slapping the Cube body on the Versa platform was that way. We love ours and don’t want to see it pulled from the market. Probably the best-packaged small car we’ve ever driven.

    • 0 avatar

      Kabayo: “Too bad it’s also the ugliest.”

      I’ll respect your opinion if you can respect mine that the Cube has endearing qualities in its design. But the biggest selling point is the interior space. We know quite a few people who did an about-face on their opinion of the Cube once they actually rode in one. It’s usually after that first ride that the design grows on them.

      My wife wasn’t smitten with the looks of the Cube, but fell in love after a test drive and noted how the exterior styling suddenly made sense.

  • avatar

    The strong yen(or a weak dollar) is the last thing Japanese automakers would want, especially when recovering from the quake/tsunami effects. The Japanese govt. has no ammo left to intervene anymore. I predict more production moved overseas, esply for low profit margin cars like the Fit, Yaris, Corolla, etc. Toyota for example, based its business plan in 2011 on a value of ¥82. Each ¥1 rise in the value of the currency will lop ¥30 billion($350 Million) off the automaker’s bottom-line. If the yen stays at 77, that’s 1.5 Billion Dollars wiped off the operating profit. The falling Euro,Chinese Yuan, rising commodity and energy prices are not helping either.

  • avatar

    To make up for the strong yen, they can command higher prices or slash incentives. We saw what that can do to sales though. Sales fell one fourth when the prices went up by $1k on average for the Japanese top 4 sedans in the last few months. Of course some of it was supply related as well.

  • avatar
    Sam P

    Nissan already has plants in Mexico, so Honda is just following the path of a competitor.

  • avatar

    They will make a profit on it, but I am not so sure quality will not suffer.

    • 0 avatar

      Quality will probably be fine. Ford has been able to make some consistently reliable cars in Mexico, as has Toyota. VW cant, but then they can’t do so elsewhere, either.

      Pity they can’t assemble them in Alliston. I’d like for the Fit to be a local product.

      Side: Doesn’t Honda already make Fits in Thailand and/or China?

      • 0 avatar

        Not that Wikipedia is 100% reliable, but it lists the following assembly sites for the current generation: Japan, Brazil, China, Thailand, Indonesia, the United Kingdom, India, Taiwan and the Philippines.

      • 0 avatar

        Quality from the VW plant in Puebla appears to be fine, as well. Generally, the problems with modern VWs have been design flaws rather than final assembly issues. Compare, for example, the US-market MKIV Golf and Jetta – same basic design and problem rates were similar, despite the fact that one was assembled in Germany and the other in Mexico.

        Anecdotally, a family member has a 2009 Jetta built in Mexico which as been flawless; looks and feels like it was very well put together.

      • 0 avatar

        I live in the Philippines part time, that the Jazz there carries an induction sticker on the rear window, meaning it’s imported, from Thailand I believe. I think only Civics are locally assembled. Domestic content would be pretty low, I’d guess. Perhaps the wiring harnesses and the transmissions are locally made.

  • avatar

    Not so much money as many would imagine. It’s EXPENSIVE to set up in a backwards environment…not only the plant need be built, but roads, electric power generation, water plants, disposal routing and treatment…and it’s always under the threat of nationalization (as PEMEX, the Mexican state-owned oil company, was American interests nationalized). Security must be provided, as the Federales are as bad or worse than ganglords.

    I hope for them it works out. But I can’t imagine Japan’s MITI, the government-industry agency, supporting the effort or Honda very strongly or for long.

  • avatar

    In the longer run, Mexico is a great destination for setting up shop. Next door to, and with favorable trade links with, a gigantic market; and with a relatively young, growing and vigorous population.

  • avatar

    Another advantage to Mexico is reduced shipping cost when selling into the USDM. A few years back this wasn’t a big consideration, but as energy costs rise it will be. Reduced shipping time also means less inventory tied up in transit, and increased agility to better respond to rapid changes in market demand.

    I expect the hollowing out of Japan’s economy to continue, it’s hard to see why they would build anything for export except for low volume high margin niche products.

    • 0 avatar
      Sam P

      Non car related, but Nikon makes all its digital SLR cameras under $2000 in a plant in Thailand. Only the really high end cameras from $2500-7000 (D3x, D3s, D700) are still made in Japan.

      Canon still produces all its digital SLRs in Japan but I predict that will change in the near future.

  • avatar

    Interesting. Honda builds the mdx in canada, but the pilot in the us. Still other cars in mexico. Mx is less regulation but other issues, security and infrastructure. US and
    CA have roads and utilities, and you don’t have to hire your own army.

    CA has higher taxes but you are free of health care and retirement problems.

    Which is best ? I’m ignoring the political considerations.

    • 0 avatar

      In general, if you can afford it, the more countries you have plants and experience working in; the less likely you are to be stuck in a country if it’s regulatory regime should get too confiscatory, or become otherwise untenable.

  • avatar

    My sub-par memory of Young Coot days stabs a few neurons with an electro-chemical jolt that brings forth a memory, a niggling recall of receiving 220 Yen for every one of the one-dollar USA bills I handed to the ship’s disbursing officer.

    Did that make me rich at the time?

    Was I wandering Tokyo’s Ginza district a wealthy Coot?

    I wonder if the quality of edible discards into Japanese-style dumpsters meets, equals or exceeds the tossed-away edibles I fear a growing percentage/number of USA residents currently or in the future rely upon to stave off starvation.

    Just a Curious Coot.

  • avatar

    I wonder if the people who normally disparage the USDM automakers for importing product north will do the same for Honda now, too?

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