The move comes amid a weakening yen, which could help Japanese automakers build vehicles more profitably for export. For years, the strong Japanese currency has hurt the country's exporters and their ability to make money on vehicles built at home. As a result, Honda and its Japanese rivals have invested heavily in building vehicles outside of Japan and manufacturing at home has taken a nose dive.But over the last three months, the yen has fallen 12 percent against the U.S. dollar.
Honda will build its new plant in Yorii, a small city located about two hours northwest of Tokyo.
The automaker's decision to open a new plant domestically is a sign that Japan's faltering economy is on the rebound, analysts say.
Not only will Honda directly provide jobs to a city with a particularly weak economy, its suppliers will also open up shop nearby. The Yorii government anticipates that about 3,800 jobs will be added to the city by 2017 when the plant is fully operational.
Honda says that it will build smaller vehicles including its Fit in Yorii, although the plant is unlikely to be tapped for export models. The next-generation North American Fit will be built in Mexico.
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