Honda is returning to its roots as it builds a $550 million plant designed to crank out vehicles equipped with four-cylinder engines.
The plant, in southeast Indiana, will be flexible enough to add models later.
"Four cylinders - that's where we established ourselves and how we grew as a company. And environmentally, we think it's the right thing to do," said Dick Colliver, executive vice president for Honda and Acura sales at American Honda Motor Co.
The Indiana site is about 100 miles from Honda's engine plant in Anna, Ohio. The Anna plant will supply four-cylinder engines to the new plant near Greensburg, Ind. Production there begins in the fall of 2008.
Honda needs the additional 200,000 units a year to keep up with demand. In 2005, American Honda achieved record U.S. sales of 1,462,472 new Honda and Acura light vehicles. That was the ninth straight year of record sales.
"We see the trend in the marketplace. You can go to the domestics, you can go anywhere else - the bloom is off the rose on big engines," Colliver said during a Wednesday, June 28, teleconference. "People are starting to understand what the price of gasoline is doing to disposable income, and we don't see that changing in the near future."
Honda announced its plan to build an auto plant May 17. The company also plans to build a $140 million engine plant in Alliston, Ontario, that will produce four-cylinder engines starting in 2008.
The construction of Honda's plant in Greensburg begins as sales of vehicles equipped with four-bangers grow and sales of eight-cylinder vehicles slip.
Sales of vehicles with four-cylinder engines rose from 30 percent of the market in the first week of January to 36.5 percent in the week ending May 7. They stood at 33.3 percent in the week ending June 18, according to the Power Information Network.
Sales of eight-cylinder vehicles slipped from 25.6 percent to 22.6 percent during the same period.
The Greensburg plant is expected to employ about 2,000 at peak capacity and is designed to accommodate other models, said Larry Jutte, general manager of Honda of America Manufacturing Inc. Honda won't reveal what models it expects to build there.
The Indiana plant becomes Honda's sixth assembly plant in North America. It will boost North American production capacity from 1.4 million units to more than 1.6 million units in 2008. American Honda President Koichi Kondo said the company decided to build the plant in the Midwest, instead of the South, to stay close to its suppliers and manufacturing network.
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