Honda to Build $3 Billion Ohio Assembly Plant, Its First New US Car Factory Since 2008

The plant will sit near Honda's existing facilities in Marysville, Ohio, and is due to start production in 2029. Honda said it will be able to build 240,000 vehicles a year and will create more than 2,000 jobs. The line is designed to build petrol, hybrid and fully electric models, so Honda can change the mix as US demand shifts. Hybrids have been gaining share in the US market.

The investment is a bet on making more cars where they are sold, as tariffs and higher logistics costs eat into carmakers' profits. Honda said the new factory will lift its US light-duty vehicle capacity to 1.3 million units a year. Nearly all the vehicles Honda and its Acura luxury brand sell in the United States are built in North America, the company said, and more than 60% are built in the US.

"This is not simply an investment in another plant. It is an investment in the future of Honda manufacturing in America," Bob Nelson, executive vice president of American Honda Motor, said at the announcement at the company's US heritage centre in Ohio, according to CNBC.

Honda had signalled that it was short of capacity. "In order to be competitive in this market, you're going to need to build products here," Jennifer Thomas, American Honda's senior vice president of corporate affairs, said in Detroit on October 27. "We are focused on trying to maximize the existing capacity that we have, but we are at capacity, and so we're exploring all options."

The plan reverses some of Honda's recent retreat. In May the company indefinitely suspended an $11 billion plan to build electric vehicles and batteries in Canada, and it cancelled three electric models planned for the US market. In Ohio, it opened a $70 million performance vehicle facility in 2016 and, earlier this year, a battery plant run as a multibillion-dollar joint venture.

Honda now has 12 manufacturing plants in the United States, eight of which make engines or light-duty vehicles, and employs more than 30,000 people there. It says it has built more than 33 million vehicles and more than 39 million engines in the US since it began car production there in 1982.

Other carmakers have made similar commitments. About two weeks ago Audi, owned by Volkswagen, said it would invest more than $4 billion in its first US manufacturing plant, in Georgia. General Motors, Ford, Toyota and Hyundai have also announced billions of dollars of spending on new or upgraded US plants.

The most immediate trade risk is on the northern border. Thomas has warned the industry faces a "catastrophic" scenario if the US and Canada fail to agree a new trade deal by the end of this year. President Donald Trump has threatened to double tariffs on Canadian vehicles and parts from 25% to 50% on January 1 if there is no deal.