Mexico City: Japanese automaker Honda will invest $800 million in a new plant in Mexico to manufacture fuel-efficient cars, the company has announced. American Honda Motor Company president Tetsuo Iwamura said the facility will have a capacity to produce 200,000 vehicles annually and will employ 3,200 people.

The plant covers 500 hectares and is located in the city of Celaya in the central Guanajuato state. The vehicles will be sold in the Mexican, US and Canadian markets.

'With growing demand for fuel-efficient vehicles, this plant will increase Honda's ability to meet customer needs for subcompact vehicles from within North America,' Iwamura said in a ceremony at the Los Pinos presidential residence.

He said the construction of the new plant, located 340 km from two existing Honda plants in the western city of El Salto, will begin this year and the first vehicles are scheduled to roll out of the assembly line in 2014.

Mexican President Felipe Calderon said Honda's announcement was 'great news for the country' and that the new investment shows that 'Mexico is on the right path'.

Honda de Mexico company was set up in this Latin American country in 1985 and began manufacturing motorcycle products and automobile service parts at its first plant in El Salto, Jalisco, in 1988.

The subsidiary started manufacturing the Honda Accord sedan in 1995 at an adjacent plant, which switched to production of the Honda CR-V station wagon in 2007.

The Tokyo-based company employs more than 179,000 people worldwide and has a presence in 128 countries.

JPN/Bureau