Honda 'to Make Civic Hybrid in US Instead of Mexico Due to Tariffs'

Honda has decided to shift production of its next-generation Civic hybrid car to the US state of Indiana from Mexico.

That change is being undertaken to avoid tariffs – being imposed by the Trump Administration – on one of its top-selling car models, according to three people familiar with the matter who spoke to Reuters.

The change underscores how manufacturers are scrambling to adapt to new US President’s proposed 25% tariffs on goods from Mexico and Canada. While several automakers have expressed concerns about the levies, Honda’s move is the first concrete measure by a major Japanese car company.

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The exact tariff levels due to be imposed on Mexico and Canada on Tuesday is yet to be confirmed, with Commerce Secretary Howard Lutnick saying on Sunday that the situation was “fluid” and he had left that determination to the president and his advisers in the White House.

“We’re going to leave that for the president and his team to negotiate.”

Japan’s second-largest automaker had initially planned to manufacture the next-generation Civic in Guanajuato, Mexico, according to the three people. Production was slated to start from November 2027, one of the people said.

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

It now plans to build the new Civic model in Indiana from May 2028 with an expected annual production of around 210,000, one of the people said. Honda would look to import from nations not hit by tariffs if production in Indiana falls short of demand, one of them said.

All of the people spoke on condition of anonymity as the information has not yet been made public.

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

80% of Honda cars in Mexico sent to US

Mexico has long been a lower-cost production hub for Japanese and other global automakers. Honda sends around 80% of its Mexican output to the United States, the world’s second-largest auto market after China.

Chief Operating Officer Shinji Aoyama warned in November that Honda would have to think about shifting production if the US were to impose permanent tariffs on imported vehicles.

Honda’s case underscores how potentially disruptive the US tariffs would be for industries that cannot drastically alter production plans in the short term given the investment and different production lines in use for different markets.

Honda sold some 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 the car Honda’s second-best seller in the US market after the CR-V.

US sales of the Civic, known for its affordability, rose 21% year-on-year last year, company data shows.

About 40% of the vehicles Honda sells in the US are imported from Mexico and Canada.

Additionally, it exports around 60,000 cars made in the US to Mexico or Canada, meaning that if those countries introduce retaliatory tariffs, Honda could face further cost increases.

BYD aiming to raise $5.2bn in HK share sale

Meanwhile, in related auto news, Chinese electric vehicle maker BYD has launched a sale of its Hong Kong shares to raise up to $5.2 billion via an accelerated book-building, according to a deal term sheet seen by Reuters on Monday.

The company has set a price range of HK$333-HK$345 per share for the offering, representing an up to 8.4% discount compared to the stock’s market closing price of HK$363.60 on Monday, the term sheet showed.