Honda to roll out cheap new hybrid model in early '09

By Chang-Ran Kim, Asia auto correspondent

TOKYO (Reuters) - Honda Motor Co said on Wednesday it would launch a new, low-cost hybrid car in Japan, North America and Europe in early 2009 as it seeks to cut the lead of Toyota Motor Corp in the green car race.

Despite the pressure of record-high oil prices and concerns over climate change, fuel-efficient and low-emission hybrids still occupy a small niche in the global car market, partly due to their higher costs for both consumers and automakers.

Japan's top two automakers lead the industry in the fuel-saving technology which runs on both electricity and gasoline, but Toyota has dominated sales with its groundbreaking Prius model, which is only available as a hybrid.

Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, said it was hard to know whether Honda could challenge Toyota's dominance.

"When you say 'hybrid,' the image that really comes to mind is Prius," he said. "Honda is very dependent on the U.S. market, which is shifting towards things like hybrids, and for survival having a hybrid (model) is essential."

By twinning a conventional engine and battery-powered electric motor, hybrids currently add $5,000 or more to comparable gasoline models, a premium Honda Chief Executive Takeo Fukui sees coming down to around $2,000 in the next generation of hybrids.

"It is important to move hybrid vehicles from the current image-oriented stage to the new stage toward full-scale penetration," Fukui told a news conference.

Executive Vice President Koichi Kondo said Honda hoped to price the hybrid-only car under 2 million yen ($19,290).

Honda now only sells one hybrid car -- a gasoline-electric version of the mass-volume Civic sedan which starts at around 2.3 million yen -- after discontinuing its hybrid-only Insight 2-seater in 2006 and a hybrid version of its Accord in 2007.

Honda expects annual sales of 200,000 for the new hybrid. Total hybrid sales, including the Civic hybrid, a new hybrid version of its popular Fit subcompact and a planned sports car based on the CR-Z concept model, are expected to reach 500,000 vehicles a year after 2010, roughly one-tenth of total sales.

FIVE-DOOR, FIVE-SEATER

Announcing other details of the new hybrid-only car for the first time, Honda said the car would be a 5-door, 5-seater similar in design to its sleek FCX Clarity fuel-cell vehicle.

The car would use more compact and lightweight components for the hybrid system and have a new vehicle platform that places the control unit and battery underneath the cargo space.

A new production line for electric motors will be added at Honda's Suzuka factory in western Japan to more than double the production speed and cut costs.

Toyota is also racing to slash production costs for future hybrid cars. It has not disclosed when the third-generation Prius would be ready, although many expect a 2009 launch.