Honda to shift Civic production from Mexico to US over duty threat - Reuters

Honda is changing its plans: the next generation Civic Hybrid will not be produced in Mexico, but in Indiana (USA). The reason is possible 25% duties on imports from Mexico and Canada, which are promoted by US President Donald Trump.

Here's What We Know

According to Reuters from anonymous sources, Honda originally planned to produce the new Civic Hybrid in Guanajuato, Mexico. Production was supposed to start in November 2027. However, due to the threat of duties of 25 per cent, the company decided to move production to Indiana. At the same time, the production start date has been moved to May 2028.

The planned production capacity in Indiana is 210,000 vehicles per year. If demand exceeds the plant's capacity, Honda may start importing cars from other countries, which will not be subject to additional duties.

A Honda spokesman declined to comment on the changes to the Civic production plan, adding that the company will continue to consider demand and the business environment, looking at "optimal production and worldwide distribution."

This is the Japanese carmaker's first concrete move in response to President Trump's possible duties. Mexico was previously chosen because rising costs made it difficult to produce the car in Indiana and Canada.

The 11th generation (current) Honda Civic Sedan in the US market version. Photo: Honda

Historically, Mexico has been home to many car assembly plants of global manufacturers, with about 80 per cent of production exported to the US, the world's second largest car market after China. This is due to cheaper (compared to US) labour, lower production costs and proximity to the United States, which is logistically convenient.

Reuters notes that Honda's case highlights how disruptive U.S. duties can be for industries that cannot drastically change production plans in the short term, given the investment and different production lines used for different markets.

Source: Reuters