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Honda Motor Co. (HMC-1.30%) will make its next-generation Civic hybrid in Indiana, not Mexico, to dodge planned U.S. tariffs on foreign imports.
Reuters, citing three people familiar with the matter, reports that Honda had planned to make the Civic in Guanajuato, Mexico. Honda opened a plant in Guanajuato in 2014, which can produce about 200,000 units each year, according to the company.
The new Civic was set to be made in Mexico beginning in November 2027, because of rising costs in Indiana and Canada, where it also has plants, one of the people told Reuters. Now, Japan’s second-biggest carmaker wants to build new Civics in Indiana, where it currently makes the Civic sedan, CR-V SUV, and Insight hybrid sedan.
The company plans to make about 210,000 Civics each year, although Honda would look to import from countries not affected by tariffs if production failed to meet demand. Honda Chief Operating Officer Shinji Aoyama in November warned that the automaker may consider shifting production if the U.S. implements permanent tariffs on imported vehicles.
Honda declined to comment on the report, noting that it had not announced any changes to the Civic’s production and that the model has been made in Indiana since 2008.
“We have the flexibility to produce products in each region based on customer needs and market conditions,” the automaker added.
The U.S. is expected to implement new 25% duties on imported goods from Canada and Mexico early on Tuesday, which will impact almost all major automakers. The supply chains of companies like Ford Motor Co. (F-2.25%) and Stellantis (STLA-3.34%) heavily rely on both nations.
The Michigan-based Anderson Economic Group estimates that a 25% tariff would add between $4,000 and $10,000 per car to vehicles assembled in North America. Aluminum and steel duties add another $250 to $800 per gas-powered vehicle and up to $2,500 on EVs, the group said.
During a Feb. 13 call with analysts, Aoyama said a 25% tariff would have a $20 billion plus impact,” according to a transcript. He noted that Honda would shift some production from Mexico and Canada to the U.S. ahead of the implementation of the tariffs to avoid some impact.
“I don’t think it is very difficult to address that situation of the tariff for those two materials,” Aoyama said of the aluminum and steel duties. The duties on Canada and Mexico, however, could create a “difficult situation” for Honda if they remain intact for multiple years.
Honda also has facilities in Ohio, Georgia, and Alabama. The company has invested $1 billion to build electric vehicles at its new EV hub in Ohio. Separately, it’s committed to investing $3.5 billion in an Ohio battery plant.