Honda (TYO:7267) and Toyota Have No Plans of Curbing Mexico Production

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The incoming US President Donald Trump has been slamming automakers for producing cars at low-cost factories across the border and then importing them back to the United States. Trump says this is happening at the cost of US jobs. To stop this, he even proposes high tariffs on such imports.

Ford Motor gave in to that pressure and scrapped their plans of making the C-Max and Focus vehicles at San Luis Potosi in Mexico. It was supposed to be a $1.6 billion investment. They will now expand their plant at Flat Rock in Michigan instead by investing invest $700 million, which will create 700 more jobs for Americans.

There are other automakers of course, which have plans of going to Mexico or are making their cars in the country already. But they all may not go the Ford way.

The Wait and Watch Policy of Honda and Toyota

Honda Motor (TYO:7267) and Toyota, both of Japan reacted to the Ford announcement by saying they don’t have any immediate plans of curbing car productions in Mexico. Apparently, they both want to wait till after the Trump inauguration as the President to find out what he eventually does.

Takahiro Hachigo, who is the President and CEO of Honda, said this in New York, “We produce cars in Mexico for markets including North America and Europe and we have no immediate plan to change this”. Akio Toyoda, the President of Toyota (TYO:7203) was quick to issue a comment as well saying, “We will consider our option as we see what policies the incoming president adopts”.

The Mexico Operations of Honda and Toyota

There are two factories of Honda (TYO:7267) in Mexico. One of them is in Guadalajara, while the other plant is at Celaya city. Together, both these plants produce about 100,000 motorcycles and 260,000 cars every year.

Toyota, on the other hand, makes close to 100,000 pick-up trucks and truck beds annually in their plant at the Baja California state. However, the company has plans of actually increasing this output to 160,000 units within 2018. Toyota is also constructing a second plant Guanajuato city where the annual production capacity will be 200,000. This plant will be commissioned in 2019.

Nissan, another top automaker of Japan has three factories in Mexico, where they make about 800,000 vehicles every year. Half of these vehicles are sent to the United States.