The Honda Motor Company has denied a report that appeared yesterday saying it was considering moving production of its United States-bound Fit subcompact cars from Mexico to Japan in a few years, partly due to the new North American trade deal.

The Fit is made in the automaker’s plant in Celaya, Guanajuato, which also makes SUVs for the U.S. market.

The news agency Reuters said two sources familiar with the Japanese company’s plans had confirmed that production was set to shift but a Honda spokesman said no decision had yet been made about where the Fit will be made.

The new trade deal between Mexico, the United States and Canada raises the minimum North American content for cars to qualify for tariff-free status from 62.5% to 75%.

The pact will also push up auto-sector wages in Mexico because it requires a higher proportion of auto content to be made in high-wage areas where workers are paid at least US $16 per hour.

The sources told Reuters that the terms of the new deal make Mexico less attractive to Honda for production of its Fit model.

They said that if the plan to shift production goes ahead, it would happen when Honda launches a new model in the next few years.

The sources added that U.S. consumers are increasingly purchasing SUVS and therefore making those rather than subcompacts made more sense for Honda’s Mexico plant.

The company issued a statement after the report appeared to say there was “no plan confirmed to move production from Mexico to Japan.”

Source: Reuters (sp)