Comply With Trump, Honda Brings Civic Hybrid Production To US

JAKARTA - Honda took a strategic step by moving the production of the latest generation of Civic Hybrid to Indiana, United States (US), from the initial plan in Guanajuato, Mexico. This decision was taken to secure the position of Civic Hybrid as one of Honda's best-selling models, as well as to respond to trade policies implemented by President Donald Trump's administration.

The US government previously encouraged automotive manufacturers to produce domestic vehicles, with the threat of high import rates for cars made outside the US.

According to a report by three sources familiar with the matter of changing production plans, Trump proposed a 25 percent tariff threat for goods from Mexico and Canada. Although many automakers have expressed their concern, Honda's move is Japan's first real action.

Initially, Honda planned to produce the latest generation of Civic in Mexico, with production scheduled for November 2027. Mexico was chosen for lower production costs than Indiana and Canada. However, with potential rates threatening, Honda is now planning to start production in Indiana in May 2028, with an annual production target of around 210,000 units.

"If production in Indiana is not sufficient, Honda will consider imports from countries that are not subject to tariffs," said one source.

A Honda spokesperson declined to comment on changes to Civic's production plans, but stressed that the company will continue to consider demand and business environment in determining "optimal production and allocation globally."

Honda's move highlights the disruptive impact the US tariff may have on industries that cannot quickly change their production plans. Mexico has long been a low-cost production center for global automakers, including Honda, which sends about 80 percent of its production to the US, the world's second largest automotive market after China.

In November, Honda's Chief Operating Officer, Shinji Aoyama, warned that the company would consider moving production if the US imposed a permanent tariff on imported vehicles.

Honda sold around 1.4 million cars and trucks in the US last year, including the Acura model. Civic, both gasoline and hybrid versions, became Honda's second best-selling model in the US with sales of more than 240,000 units. Civic's sales in the US jumped 21% last year, driven by its popularity as an affordable car.

About 40 percent of Honda vehicles sold in the US are imported from Mexico and Canada. In addition, Honda exports around 60,000 US-made cars to Mexico and Canada. If these countries retaliate at a rate, Honda can face further increases in costs.