TOKYO (Reuters) - Honda has decided to produce its next-generation Civic hybrid in the U.S. state of Indiana, instead of Mexico, to avoid potential tariffs on one of its top-selling car models, according to three people familiar with the matter.

The change underscores how manufacturers are scrambling to adapt to U.S. President Donald Trump'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.

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, according to one of the people.

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".

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