Honda plans to double minicar ratio in Japan: report

TOKYO (Reuters) - Honda Motor Co plans to double the proportion of minivehicle sales in Japan in five years, hoping to woo customers replacing older vehicles amid a shrinking domestic market, the Nikkei business daily said on Monday.

Minivehicles have engine displacements of up to 660cc and are unique to Japan, making up one-third of new vehicle sales thanks to preferential tax treatment. They are especially popular in rural areas as a second or third family car.

Japan's No.3 automaker will first release in December a new wagon-type model that will get fuel economy of 25 km per liter, likely making it among the most fuel-efficient cars of its kind, the Nikkei said. Two more new minicars are set to be introduced in 2012, the report said.

A company spokesman said Honda could not confirm the details in the report.

Honda had announced plans last year to beef up its minivehicle operations and produce newly developed models at its Suzuka factory starting in 2012 instead of at subsidiary Yachiyo Industry. Chief Executive Takanobu Ito said at the time he would not be surprised if minivehicles eventually made up 50 percent of the Japanese market.

Rivals have also unveiled plans to strengthen sales in the minivehicle market, dominated by Suzuki Motor Corp and Daihatsu Motor Co.

Nissan Motor Co and Mitsubishi Motors Corp said in May they would form a joint venture to develop minivehicles. Nissan currently gets 660cc vehicles made under its own badge by Mitsubishi Motors and Suzuki.

In a move set to shake up competition in the minivehicle market, Toyota Motor Corp is due to enter the market in the coming weeks with a Toyota-badged minivehicle made by unit Daihatsu.

Honda sold 160,000 minivehicles, or about 24 percent of a total of 650,000 vehicles in Japan last year. The company now aims to boost sales of minicars to 300,000 over the next five years, or 43 percent of the company's projected overall sales of 700,000, the Nikkei said.

(Reporting by Mariko Katsumura and Chang-Ran Kim; Editing by Edwina Gibbs and Chris Gallagher)