Honda may delay or cancel plans for an eighth assembly plant in North America if a key trade agreement is not extended, according to a senior executive. Noriya Kaihara, Executive Vice President at Honda Motor Co., stated that the Japanese automaker is nearing full production capacity in North America and requires a new manufacturing facility.
"If there is no USMCA agreement in the future, we may have to change our direction," Kaihara told reporters in Washington. He indicated that a decision on the plant is expected within the next one to two years, with the aim of having it operational by approximately 2030.
The uncertainty surrounding the United States-Mexico-Canada Agreement (USMCA) comes as the Trump administration is renegotiating the pact with Canada and Mexico. Honda is currently not passing on the costs of U.S. tariffs to its North American customers. The U.S. imposed tariffs on Canadian products in September, leading to retaliatory measures from Canada.
Other automakers have also expressed concerns about the trade deal's ambiguity. Hyundai Motor previously informed the administration that uncertainty regarding the USMCA was delaying its investment decisions. In November, the South Korean automaker stated that an early confirmation of the USMCA's extension would immediately unlock over $20 billion in new American investments, warning that each month of uncertainty slows job creation and site selection.
Honda has experienced a surge in demand for its hybrid and fuel-efficient models, with July sales increasing by 36%, marking the company's best performance in seven years, amid high oil prices. However, the company has made significant adjustments to its electrification strategy. Earlier this year, Honda indefinitely suspended its $11 billion EV project in Canada, which was intended to produce electric vehicles and batteries. It also canceled three planned EV models for the U.S. market. Honda had previously announced a shift in production of its U.S.-bound five-door Civic hybrid model from Japan to Indiana.
The company revised its long-term EV sales targets in May, reducing its goal of having EVs represent a fifth of new car sales by 2030 to a new target of 15 new hybrids by the same year.