Japanese automaker Honda announced plans Friday to build a new plant in Mexico that will employ 3,200 people and build fuel-efficient subcompact vehicles for the Mexican, US and Canadian markets.

Honda will invest $800 million to build the plant, which is expected to begin operations in 2014 and will have the capacity to build 200,000 vehicles per year.

"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," said Tetsuo Iwamura, chief operating officer for Honda's North America Region.

"This new plant will further strengthen the foundation of Honda's North American business by enabling Honda to more flexibly respond to changing market conditions from within the region."

It will be Honda's eighth auto plant in North America and will increase the company's regional production capacity from its current 1.63 million vehicles to 1.83 million units in 2014.

The new plant will occupy a 5.66 million square meter site in a suburb of Celaya, Guanajuato, about 210 miles east of Honda's two existing plants in El Salto, Jalisco, which build automobiles, motorcycles and auto parts.

Honda - which is recovering from the supply disruptions caused by the devastating Japanese tsunami and earthquake - also recently announced plans to expand production in the United States and Canada by adding a second shift to plants in Indiana, Ohio, and Ontario.

Honda employs more than 33,000 people in North America and this latest plant will boost its capital investments to nearly $21 billion.

Honda opened its first US plant in 1979 to build motorcycles. It currently operates 14 manufacturing facilities in North America that build Honda and Acura automobiles and auto parts, all-terrain vehicles, and products such as lawn mowers and mini-tillers.

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