Honda (HMC) Commences Acura MDX Production At ELP, Ohio

 | Jun 01, 2017 03:24AM ET

Honda Motor Company (NYSE:HMC) has started manufacturing Acura MDX, the luxury SUV, at its East Liberty Auto Plant (“ELP”) in Ohio. Out of six models under the Acura brand, five are now being built in Ohio with the start of MDX production at ELP.

Honda has invested $85 million in the ELP for addition of new welding equipments, extension of vehicle conveyors and other changes required to support production of the Acura MDX. With this investment, the plant became the second U.S. production location for MDX, the first being in Lincoln, AL.

The model MDX is an award-winning Acura vehicle. It has been restyled in 2017 with added new features including the exterior styling, larger wheel and tire options and an expanded complement of premium features and technologies.

Started in 1989, ELP also makes the best-selling SUV in America for Honda. The plant serves as a global leader in several key areas for its recent launch of CR-V 2017. It employs 2,350 associates with an area of 2.8 million square foot and an annual capacity to manufacture 240,000 passenger cars and light trucks.

Honda has been facing higher R&D expenses and foreign currency headwinds. The company has also provided weak guidance for fiscal 2018. It expects the R&D expenses and negative currency translation to be around ¥54 billion and ¥95 billion, respectively. Also, the operating income is likely to decline 16.1% to ¥705 billion ($6.71 billion). Net income is projected to fall 14% to ¥530 billion ($5.05 billion) or ¥294.07 ($2.83) per share, down 48% year over year.

Over the last few years, Honda has also been frequently recalling vehicles. The Japanese automaker is the largest customer of the faulty Takata airbags which can explode and shoot out metal fragments in a crashed vehicle. The company needs to recall 10.7 million Honda and Acura vehicles to replace the Takata airbag inflators.

Price Performance

Honda’s share has underperformed the Zacks categorized Automotive-Foreign industry in last three months. The company’s shares lost 9.9% compared to the industry’s decline of 3.6%.