Honda Shifts Gears: Ramps Up U.S. Output as Tariffs Bite, Plots Electric SUV Surge in India

Honda is reportedly exploring a shift in its manufacturing strategy, aiming to produce up to 90% of the vehicles it sells in the U.S. within the country itself. This move comes as a response to new 25% tariffs on imported vehicles introduced by the U.S. government, according to a report by Japan’s Nikkei newspaper.

While the Japanese carmaker has not officially confirmed these plans, the report by Reuters suggests Honda could ramp up its American vehicle production by as much as 30% over the next two to three years. Industry observers reckon that the decision could affect production currently based in Canada and Mexico.

Ahead of the tariff announcement, sources had already indicated Honda’s intent to manufacture its next-generation Civic hybrid at its Indiana plant instead of making it in Mexico — a strategic shift to avert import duties.

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The U.S. remains Honda’s largest market, contributing nearly 40% of its global sales. In 2023, the company sold 1.4 million vehicles in the U.S., including its luxury Acura line, with roughly 40% of those units imported from neighboring countries.

In the first quarter of this year, Honda recorded a 5% year-on-year increase in U.S. sales, reaching nearly 352,000 vehicles.

According to the Nikkei report, Honda plans to relocate production of the CR-V from Canada to the U.S., and the HR-V from Mexico. The company is also considering adding more shifts and expanding weekend operations at its U.S. factories, which would likely involve hiring additional staff.

India to Get Honda’s First All-Electric SUV

On a separate front, Honda Cars India is preparing to launch its first fully electric vehicle — the Elevate EV — between 2026 and 2027. Based on the current Elevate platform, the upcoming electric SUV will feature a new design and a zero-emission powertrain.

Expected to offer a driving range of around 500 km per charge, the Elevate EV will target the mid-size SUV segment, where it will compete with rivals such as the Tata Curvv EV, Maruti e-Vitara, and Hyundai Creta Electric.