Honda to boost output at factory in Mexico

March 23 (Bloomberg) -- Honda Motor Co. will spend $8 million to expand a Mexican assembly plant and switch its production over to the CR-V, the best-selling small sport- utility vehicle in the U.S.

Honda will build 50,000 CR-Vs a year at El Salto, near Guadalajara, where it now makes Accord sedans at a rate of 30,000 a year, spokesman David Iida said in an interview today.

The increase will help Honda, Japan's second-largest automaker, keep up with CR-V demand in both the U.S. and Mexico. U.S. sales of the CR-V rose 13 percent in 2006 and are up 42 percent so far this year following a redesign.

``We expect at least 100,000 CR-Vs to be built in North America next year, including plants in Mexico and Ohio,'' said Catherine Madden, an analyst with Global Insight Inc. in Lexington, Massachusetts. ``They'd probably like even more production of it here, but won't have capacity to do that until the new Indiana plant opens.''

Honda this week broke ground for a $550 million plant in Greensburg, Indiana, that will begin making Civic small cars next year.

Tokyo-based Honda, like larger rival Toyota Motor Corp., is shifting more auto production to North America as sales in the region climb. Honda has said it wants to minimize imports to the U.S., its largest market, and produce about 80 percent of autos sold there in North America.

Factory Modifications

Some CR-V assembly will begin at El Salto late this year, and by 2008 the factory will make only the SUV, Iida said. The plan will require at least $8 million for factory modifications, he said.

Half of El Salto's CR-Vs will be sold in Mexico, with the rest going to the U.S. and other Latin American markets.

The vehicles will be assembled from components made at a Honda plant in East Liberty, Ohio, which also manufactures the CR-V, Iida said. He declined to say whether Honda intends to boost CR-V production at the Ohio factory.

Parts of Honda's production plan were reported earlier today by Automotive News, a trade publication. Honda's U.S. operations are based in Torrance, California.

Honda's American depositary receipts rose 41 cents to $36.44 at 4:22 p.m. in New York Stock Exchange composite trading. The shares have risen 20 percent in the past 12 months.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at

Source: [url=http://www.latimes.com/business/la-fi-briefs24.3mar24,1,1972928.story?coll=la-headlines-business]Los Angeles Times[/url]