Honda starts making Fit cars in Mexico

Honda has started making its Fit subcompact in Celaya, Mexico, as the automaker continues to move production from Japan to North America for vehicles it sells in the U.S.

Until now, all Fits sold in North America were imported from Japan. Fit is the smallest car that Honda sells in the U.S. A crossover vehicle is also expected to be made off the same Fit platform at the plant.

Honda is investing $800 million in the assembly plant and $470 million in the adjacent transmission plant in Celaya because of Celaya's lower labor rates and proximity to two port cities, one on the Pacific Coast, the other on the Gulf of Mexico.

This is the latest in a series of new investments automakers are making in Mexico. Chrysler, Nissan and Volkswagen are all either expanding or opening new plants south of the border.

Rick Schostek, a Honda vice president, said Celaya has access to a rail line and highways for shipping parts and finished cars.

MORE: Mexico to best Japan in car exports to the U.S.

Celaya, with a population of more than 300,000, is about three hours by car northwest of Mexico City.

"The officials in Mexico were very great to deal with. We had good cooperation and partnership with them," he said.

The new Fit has been redesigned with more interior and cargo space.

In 2013, Honda sold 53,513 Fits in the U.S., up 8.4% from 2012. The Fit competes with the Ford Fiesta, Nissan Versa, Toyota Yaris and Chevrolet Sonic.

Honda's new Mexican assembly plant will employ 1,600 now and grow to 3,200 when it reaches full production at the end of this year. The plant is capable of making about 200,000 cars annually. The new transmission plant will employ 1,500 when it opens in 2015.

That will boost Honda's annual production capacity in North America to 1.92 million vehicles. In 2013, more than 90% of the Honda and Acura cars and SUVs sold in the U.S. were produced in North America. That will increase to more than 95% when the Celaya plant reaches full capacity.!