UPDATE 1-Honda delays hybrid vehicle production in China

Fri Jun 14, 2013 6:19am EDT

TOKYO, June 14 (Reuters) - Japan's Honda Motor Co. will delay the start of production of gasoline-electric hybrid cars in China in a bid to source cheaper parts, a company official said, in an apparent response to rival Toyota's cost-saving measures.

Honda had intended to start local production of hybrid cars in China by as early as next year, but said on Friday local production had been put back "to within three years" in order to source cheaper components from parts suppliers in China.

"Affordability is critical," said Natsuno Asanuma, the Honda spokeswoman in Beijing.

Honda provided no further details about the type of components it wanted to source more cheaply, or on possible joint ventures with Chinese companies.

China has been the world's biggest auto market since 2009, but hybrid sales have been comparatively slow. That could soon change, however, as Beijing is looking at boosting subsidies to increase sales of "new-energy" cars.

Honda's delay comes after Toyota Motor Corp said last month it was trying to source key hybrid components in China to make hybrids more affordable. Toyota said it was planning a joint venture in China with a local supplier to produce batteries for gas-electric hybrid cars.

The move comes as Toyota - and other automakers in China, both indigenous Chinese and foreign - gear up to try to kick-start sales of "conventional" hybrid cars in China in anticipation of policy changes aimed at boosting sales of hybrid vehicles.

Under the current policy, China provides generous subsidies for private purchases of all-electric battery vehicles and heavily electrified "near all-electric" plug-in hybrids, but only limited support for the conventional gas-electric hybrids.

A growing number of industry insiders and experts believe Beijing will boost purchase subsidies significantly for conventional hybrids as early as this year.

On Friday, Honda also said it planned to introduce 12 new or significantly redesigned models before the end of 2015 in China. Previously, Honda had said it planned to launch more than 10 such new and significantly redesigned models in China.

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