Tariff concerns prompt Honda to move Civic production from Mexico to US

Honda volition not beryllium gathering its next-generation Civic hybrid successful Mexico arsenic primitively planned, according to the quality bureau Reuters.

Sources cited by Reuters accidental the Japanese automaker was influenced by the menace of tariffs from United States President Trump connected goods from Mexico and has decided to manufacture the Civic — 1 of its top-selling models — successful the U.S. authorities of Indiana.

Future models of the Honda Civic volition beryllium produced successful Indiana, not Mexico, according to institution sources. (Honda)

Honda had initially planned to manufacture the caller Civic exemplary successful the Mexican authorities of Guanajuato, Reuters reported, adding that “production was slated to commencement from November 2027.”

One root told Reuters that Mexico had been chosen “because rising costs were making it pugnacious to nutrient the [Civic] successful Indiana and Canada.”

U.S. income of the fashionable Civic, which is appreciated for its affordability, roseate 21% year-on-year past year, according to Honda. Reuters reported that the institution “sold much than 240,000 Civics, some gasoline and gasoline-electric hybrid models” successful the U.S. successful 2024.

Is Honda the archetypal domino to topple connected the tariff crippled board?

Several companies successful the automotive assemblage — including Nissan and Nemak, a starring car parts shaper — person said they are considering relocating accumulation if faced with caller duties, but Honda’s determination to the U.S. would beryllium the archetypal ample operational readjustment successful the industry.

Nissan presently operates 2 factories successful Aguascalientes and 1 successful Morelos, Mexico. (Nissan de México)

Honda has not officially commented connected the reports astir the next-generation Civic, saying it volition proceed to see “optimal accumulation and allocation globally,” successful summation to request and the concern environment.

The institution has been weighing its options successful the look of caller tariffs since November 2024. 

Shinji Aoyama, Honda’s Chief Operating Officer, said past that Honda would person to deliberation astir shifting accumulation if the U.S. were to spot a levy connected imported vehicles. During a telephone with analysts successful aboriginal February, Aoyama said a 25% tariff connected imports to the U.S. could origin an interaction of implicit US $132.7 cardinal connected the company, according to the manufacture work Automotive Dive.

The tariff leaf could chopped some ways. If Mexico oregon Canada present retaliatory tariffs, Honda could look further outgo increases since it exports astir 60,000 cars made successful the U.S. to Mexico and Canada.

Roughly 80% of the 200,000 vehicles Honda produces successful Mexico are shipped to the U.S. and astir 40% of each Hondas sold successful the U.S. are produced successful Mexico and Canada.

Reuters reported that Honda’s lawsuit highlights the imaginable for disruption “in industries that cannot drastically change accumulation plans successful the abbreviated word fixed the concern and antithetic accumulation lines successful usage for antithetic markets.”

With reports from Reuters, Expansión, Automotive Dive and Reforma