Honda has decided to manufacture its next-generation Civic Hybrid in Indiana instead of Mexico, a move driven by concerns over potential 25% tariffs on goods from Mexico and Canada. According to sources familiar with the decision, this marks a major shift for a Japanese automaker in response to proposed U.S. trade policies.
Initially, Honda planned to build the Civic Hybrid in Guanajuato, Mexico, with production set to begin in November 2027. Rising costs had made it difficult to manufacture the vehicle in Indiana or Canada, leading to the original decision. However, Honda has now opted to shift production to Indiana, with manufacturing expected to begin in May 2028 and an annual output of approximately 210,000 units.
Potential Production Expansion & Global Strategy
If demand surpasses Indiana’s capacity, Honda may consider importing vehicles from countries not impacted by U.S. tariffs. Sources close to the matter requested anonymity since the information has not been officially disclosed. When asked about the production shift, a Honda spokesperson declined to comment on the specifics but emphasized that the company continuously evaluates market conditions and production strategies to ensure efficiency.
Mexico’s Role in Honda’s Supply Chain
Mexico has long served as a cost-effective manufacturing hub for Honda and other global automakers. Currently, Honda exports about 80% of its Mexican-made vehicles to the U.S., the world’s second-largest automotive market after China.
In November, Honda’s Chief Operating Officer, Shinji Aoyama, warned that permanent tariffs on imported vehicles could force the company to rethink its global production strategy. The shift to Indiana illustrates how difficult it is for automakers to quickly adapt to policy changes, given the complexity of manufacturing investments and supply chain logistics.
Impact on U.S. Sales & Market Position
Honda sold around 1.4 million vehicles in the U.S. last year, including Acura models. The Civic, available in gasoline and hybrid versions, accounted for over 240,000 sales, making it Honda’s second best-selling vehicle after the CR-V. Civic sales grew 21% year-over-year, underscoring its strong demand in the U.S. market.
Currently, about 40% of Honda’s U.S. sales come from vehicles imported from Mexico and Canada. Additionally, the company exports around 60,000 U.S.-made vehicles to these countries. If Mexico and Canada retaliate with tariffs, it could further escalate costs and impact Honda’s overall pricing strategy.
Key Takeaways
✔ Honda shifts next-gen Civic Hybrid production from Mexico to Indiana
✔ Move driven by concerns over potential 25% tariffs
✔ Indiana plant to produce 210,000 units annually starting May 2028
✔ Civic is Honda’s second-best-selling model in the U.S., with 240,000+ units sold in 2024
✔ Mexico remains a key production hub, but tariffs could reshape Honda’s strategy
This decision signals a significant adjustment in Honda’s manufacturing strategy, reflecting the broader impact of trade policies on the global auto industry.