Honda Nears 100% Local Sourcing in North America

Honda is on course to nearly match the Detroit Three auto makers in the percentage of cars and light trucks it sells in North America that are produced locally.

That number steadily has risen since Honda delivered its first North American-made car in the U.S. in 1983, a WardsAutoanalysis finds. This year, the Japanese auto maker’s plants in the region are expected to account for 89% of the company’s local sales and climb to more than 90% in 2013.

Honda’s manufacturing investments in the next two years, including additional capacity at its Greensburg, IN, plant in 2013 and the start of production at a new factory in Mexico in 2014, have the auto maker on track to come close, or possibly match, the 97%-98% local-build rate of Detroit Three light vehicles predicted to be sold in North America in the coming years.

The WardsAuto analysis projects Honda will top out at 96% in 2015, the first full year its new facility in Mexico will be building the Fit subcompact car, currently imported from Asia. But vagaries of the market and the possibility the auto maker could decide to source more vehicles in North America may send that mark closer to 100%.

The Fit will be the last of Honda’s high-volume vehicles to be brought to North American production, although the auto maker could continue to import some Fits after the new plant opens.

Honda currently sources its Civic small car and CR-V cross/utility vehicle from Asia and North America. It relies on overseas factories for the Acura RL and TSX luxury cars and the Honda CR-Z mild hybrid and Insight hybrid-electric vehicle.

The capacity increase at Greensburg could end Civic and CR-V imports altogether. Because the factory will be able to produce more Civics, it will free-up space for more CR-Vs at Honda’s Alliston 2 plant in Ontario, Canada, that builds both vehicles. Notably, the facility has not produced Civics since March. Demand likely will determine what other vehicles Honda decides to stop exporting to North America instead.

Even with the Civic capacity increase and the new plant in 2014, the auto maker still will be maxing out operations in the region for a long time. It also will keep the option open to source certain vehicles from overseas even if it ceases imports in the interim.

Honda already is well ahead of the North American industry’s 2012 projection of a 77% mix of domestically produced vehicles. In fact, the auto maker has outpaced the industry average since first surpassing it in 2004.

The Detroit Three auto makers, which together have run a domestic mix of 97% since 2004, largely influence the industry average and have been ahead of the pack for years.

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