Honda will manufacture the Civic Hybrid in Indiana

MEXICO - Honda decided to produce its next-generation Civic hybrid in the U.S. state of Indiana, rather than Mexico, to avoid potential tariffs on one of its best-selling car models, according to three people familiar with the matter.

The shift underscores how manufacturers are struggling to adapt to Donald Trump's proposed 25% tariffs on products from Mexico and Canada. While several automakers have expressed concern about the levies, Honda's decision is the first concrete move by a major Japanese automaker.

Japan's second-largest automaker had initially planned to produce the next-generation Civic in the state of Guanajuato. Production was scheduled to start in November 2027.

Mexico was chosen because rising costs made it difficult to produce the car in Indiana and Canada, one of them said.

It now plans to manufacture the new Civic model in Indiana starting in May 2028, with a planned annual production of about 210,000 units, one of the people said. Honda would look to import from countries not affected by the tariffs if production in Indiana doesn't meet demand.

A Honda spokesperson declined to comment on changes to the Civic production plan, adding that the company would continue to take into account demand and the business environment while considering “optimal production and allocation globally.”

Mexico has long been a low-cost production center for Japanese and other automakers. Honda ships about 80% of its Mexican production to the United States, the world's second largest automotive market after China.

Chief Operating Officer Shinji Aoyama warned in November that Honda would have to consider relocating production if the U.S. imposed permanent tariffs on imported vehicles.

Honda's case underscores how potentially disruptive U.S. tariffs would be for industries that cannot drastically alter production plans in the short term, given the investments and different production lines in use for different markets.

Honda sold about 1.4 million cars and trucks in the United States last year, including Acura models. It sold more than 240,000 Civics, both gasoline and gasoline-electric hybrid models, making it Honda's second-best-selling car in the U.S. market after the CR-V.