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Honda to Boost SUV Production in US, Shift from Mexico


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Honda Motor Co., Ltd. (HMC - Analyst Report) has decided to expand the production capacity of its new generation CR-V sport utility vehicle (SUV), shifting production to the U.S. from Mexico. The decision is expected to impact this vehicle segment by intensifying competition.

Honda also unveiled the re-engineered 2017 CR-V on Wednesday in Detroit's Eastern Market. Further, the company will be expanding the overall production of cars in North America by building CR-Vs at Alliston, Ontario, East Liberty, OH and for the first time in Greensburg, IN. The facility in Greensburg will be producing the capacity that will be shifted from Mexico. This facility has the capacity to manufacture roughly 250,000 vehicles per annum and will continue producing the Honda Civic along with the CR-V.

Honda has decided to produce both models side by side for an easier shift in production between the two. The company expects demand for SUVs to grow while that of sedans is likely to reduce. Honda has not yet revealed the pricing or mileage data for the new CR-V, which is slated to be sold from later this year.

Auto manufacturers primarily dedicated to producing small cars have faced problems recently. Fiat Chrysler Automobiles N.V. (FCAU - Snapshot Report) has started laying off employees at two of its U.S. car factories, which it now plans to retool to build trucks and SUVs.

Zacks Rank

Honda currently sports a Zacks Rank #1 (Strong Buy).

Other equally well-ranked companies in the auto space include The Goodyear Tire & Rubber Company (GT - Analyst Report) and Tata Motors Limited (TTM - Snapshot Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.

Goodyear Tire has seen its earnings estimates move north over the last 60 days. Also, the company posted positive earnings surprises over the last four quarters, with an average of 10.28%.

Tata Motors has a long-term expected growth rate of 3.6%.

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