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 next-generation Civic hybrid was set to be produced in Guanajuato, Mexico, in 2027, according to Reuters, but will now be based in Indiana beginning in 2028.

To avoid import tariffs on vehicles made in Mexico, Honda Motor Co (NYSE:HMC) will reportedly manufacture the next generation of the Civic in Indiana, sources cited by Reuters said. Honda had initially planned to build the newest model Civic in Guanajuato,