Car technology race still wide open: Japan execs

By Chang-Ran Kim, Asia autos correspondent

TOKYO (Reuters) - As Detroit's Big Three automakers flirt with collapse, punished for years of over-dependence on gas-guzzlers, the future of the motor industry would seem to belong to energy conscious rivals such as Japan's Toyota Motor Corp and Honda Motor Co Ltd.

Not necessarily, say Japanese auto executives.

Honda Executive Vice President Koichi Kondo says "the game is still open" as car-making enters a new phase in which alternative energy sources and power systems will become mainstream, re-writing the rules of a century-old business.

"So far, the majority of cars still run on internal combustion engines," Kondo told Reuters in a recent interview.

"Sure, there's all kinds of hype about electric vehicles and hybrids and fuel-cell cars, but no one has the breakthrough technology to bring them into the mainstream."

That may seem surprising coming from a company that has, with Toyota, been alone for most of the last decade in offering fuel-sipping, gasoline-electric hybrids, seen as the next big thing to replace gasoline and diesel-powered cars.

To widen that lead, Honda is preparing to launch next spring its low-cost Insight, which CEO Takeo Fukui has said would mark the true test for hybrid cars as a sustainable business after selling at a loss or at razor-thin margins so far.

Kondo's peer at Japan's third-ranked Nissan Motor Co agrees, saying the most difficult part is mass production -- a feat first achieved 100 years ago by Henry Ford with the Model T.

"You can't build next-generation cars cheaply enough without the volumes," Mitsuhiko Yamashita, Nissan's executive vice president in charge of research and development, told Reuters last week.

"It's thanks to Ford's system that we can sell a lump of steel with all those functions at a relatively low price. The business model doesn't work with vehicle technology alone."

VOLT TO THE RESCUE?

That should be music to the ears for companies such as General Motors Corp that are bleeding cash but are not necessarily behind in developing next-generation cars.

GM is betting on its Chevy Volt electric car to grab the industry crown back from Toyota and craft a new image as an automaker capable of producing "green" cars.

Nissan and French partner Renault SA hope to pull off something similar with their big push into electric cars.

Although they have no prototype on the road, the partners are busy signing up municipal and national governments for tax incentives and other programs to pave the way.