Honda is considering backing out of plans to build an eighth assembly plant in North America unless the United States-Mexico-Canada Agreement (USMCA) is extended.
The details: Honda Executive Vice President Noriya Kaihara discussed the automaker’s position on the plant during a roundtable with reporters in Washington, according to Reuters, underscoring how critical the company views the USMCA to its North American operations.
Honda is close to full production capacity in North America and needs a new factory, said Kaihara.
The automaker has so far been able to avoid passing tariff costs on to North American buyers, but Kaihara expressed uncertainty about the potential fallout if the USMCA does not remain intact.
"…if there is no USMCA agreement in the future, we may have to change our direction," Kaihara said, adding the company will need to make a decision within a year or two and would like the plant to be running by around 2030, per Reuters.
Why it matters: A new North American plant could give Honda dealers access to additional vehicle supply as the automaker nears its current production limits, but uncertainty surrounding the USMCA could delay or derail capacity investments needed to support future sales growth.
Between the lines: Honda’s position on an eighth North American plant adds more pressure to already tense trade negotiations as the future of the USMCA remains uncertain.
The U.S. and Canada remain firm in their opposing positions on trade demands, fueling a trade dispute—with autos at the center—that could have implications for the USMCA.
Honda has already suspended plans for an $11 billion investment to produce EVs and batteries in Canada and scrapped three planned EVs for the U.S., though the company said slowing EV demand also played a role in those decisions.
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What they’re saying: "Early confirmation of USMCA's extension would immediately unlock over $20 billion in new American investments," Honda said in November, per Reuters. "Every month of ambiguity slows job creation, site selection and technology development."
Bottom line: Honda’s warning shows how uncertainty over the USMCA is beginning to influence long-term manufacturing decisions, with billions in investment and additional North American production capacity potentially at stake—investments that could ultimately shape vehicle availability, costs and growth opportunities for dealers.
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