Honda Malaysia (HM) today announced that it will be producing hybrid vehicles in Malaysia, starting with the Honda Jazz Hybrid. The announcement was made by Hiroshi Kobayashi, President and CEO of Asian Honda Motor Co Ltd, at the foundation stone laying ceremony of a new “No. 2 Line” to be built at Honda’s Pegoh Plant in Alor Gajah, Melaka.

This means that when the first Honda Jazz Hybrid rolls out of the Melaka plant later this year, Honda will be the first manufacturer to produce hybrid cars in Malaysia. Currently, Honda hybrid vehicles are made only in Japan and the USA.

“We will start local production of the Jazz Hybrid at the Melaka plant by the end of this year. Southeast Asia in particular holds a very important position for Honda’s global business. With a huge population, strong GDP growth and spending power, the demand for passenger vehicles in this region has grown tremendously in the past 10 years. We want to keep on creating products that maximise the joy of our customers, with speed, affordability and low CO2 emissions in these markets,” Kobayashi san said.

HM has been manufacturing vehicles in Malaysia since 2003. It is investing RM350 million for the expansion, which includes building, equipment and facilities. The No.2 Line is scheduled to begin operations by the fourth quarter of 2013 and will be able to produce 100,000 units annually. Hybrid vehicles will roll off the No.1 Line while the No. 2 Line is to increase HM’s ability to meet market demand for compact vehicles. Tech transfer comes in the form of latest General Welding equipment.

Jazz Hybrid aside, the upgraded Melaka plant will also roll out the City, Civic, Accord and CR-V. Currently, HM sources about 40% of CKD vehicle components locally, and plans to further increase local content.

When both the production lines are up and running, HM will be able to produce up to 800 vehicles per day, double its current output. The expanded factory will occupy a total space of 8.48 million square metres when completed, almost double the current 4.32 million square metres. HM also expects to employ 700 new staff.

The expanded factory will be complemented by a RM40 million Pre-Delivery Inspection Centre (PDI) and Vehicle Quality Test Course. The latter is designed with various dynamic testing zones and road conditions, and can test two new vehicles per session. Earlier this year, HM officially opened its new warehouse to provide better support to dealers.

Click here for our launch report of the Honda Jazz Hybrid. As a CBU import from Japan, the IMA-powered B-segment hatchback is priced at RM94,800 OTR including insurance. How much do you think the CKD Jazz Hybrid will cost?