Kelley Blue Book Expects Honda Pricing to Ease with U.S. Production Shifts

In an ongoing effort to mitigate the impact of the strong Yen, Honda has just recently announced that it will shift production of the Civic Hybrid to its plant in Indiana, which is already running at full capacity now that the Acura ILX and ILX Hybrid are being produced alongside the Civic.  The shift in capacity won’t stop in Indiana, as Honda also has initiated plans to shift production of the Honda Fit to Mexico in 2014.  This production shift follows Honda’s statement in June that it was planning on limiting shipments of vehicles produced in Japan to reduce losses related to the strong Yen. 

Honda’s announcement mirrors the sentiment of both Toyota and Nissan, which have made similar plans to shift production out of Japan to limit losses while maintaining share in the United States and a prediction made by Kelley Blue Book analysts in the summer of 2011 as the Yen began to strengthen.  By shifting production to the U.S., Japanese manufacturers will be able to lower production and labor costs, as well as significantly reduce the cost of transportation, as they will no longer have to ship vehicles across the Pacific. 

“With this shift, consumers can expect to see improvements in both vehicle availability and pricing once U.S. production goes online.  We also expect that Honda will pick up additional market share in the U.S. by boosting production overseas,” said Alec Gutierrez, senior market analyst, automotive insights, Kelley Blue Book.  “Even though Honda and most Japanese manufacturers already produce the bulk of their vehicles sold in the United States in North America, we expect the Yen to remain strong for the foreseeable future and additional capacity to move from Japan to the U.S.”