Honda Plans a Low-Cost Hybrid

TOKYO -- Honda Motor Co. announced it will launch a low-cost, gas-electric hybrid car in the U.S., Japan and Europe in early 2009, one of four hybrid models the auto maker plans to release by 2015 to challenge Toyota Motor Corp.'s dominance in the "green" car market.

Honda President Takeo Fukui didn't disclose the price tag of the new five-passenger vehicle, but he said the cost of hybrid cars shouldn't be more than $2,000 above that of comparable gas-engine cars.

Speaking in Tokyo, Mr. Fukui also said that in July, a hydrogen-powered fuel-cell vehicle, the FCX Clarity, will be available for leasing in California to a limited number of customers. Honda aims to deliver 200 of the vehicles in the next three years.

The announcement of vehicle launches highlights Honda's push to reclaim its role as a leader in green car technology.

In 1999, Honda was the first to launch a hybrid car, the Insight, to the U.S. market, and it later introduced hybrid versions of the Civic and Accord. Honda's green efforts quickly were overshadowed by those of Toyota, whose four-seater Prius hybrid proved more practical for consumers than the two-seater Insight. The Prius has been a hit with drivers since it went on sale in the U.S. in 2000.

During the past decade, Toyota has sold more than 1.46 million hybrids world-wide, including more than one million Prius hybrids. Honda has sold about 262,000 hybrids, and it discontinued sales of two models, the Insight and Accord, because of poor sales.

Honda's goal is to sell 500,000 hybrids a year sometime after 2010. Still, that would fall short of Toyota's target of selling one million hybrids annually sometime early in the next decade.

Honda says it will increase sales by introducing a lineup of hybrid vehicles, including a sport hybrid based on the CR-Z, a redesigned Civic Hybrid and a hybrid version of the fuel-efficient Fit subcompact. The key element of its new green strategy is to make hybrid vehicles more affordable.

"It is important to move hybrid vehicles from the current image-oriented stage to the new stage of full-scale penetration" of the market, Mr. Fukui said.

Mr. Fukui said that the new vehicle, which has yet to be named, will be affordable and that weight reduction, more compact components and new technologies will help increase fuel efficiency.

At present, hybrids cost significantly more than gas-engine vehicles. The Toyota Camry hybrid, for instance, costs $6,730 more than the gas-engine model, while Honda's Civic hybrid is about $4,000 more than the gas model.

Honda's first new vehicle will be sold only as a hybrid, as is the Toyota Prius. Honda expects to sell about 200,000 of these vehicles annually, half of those in the U.S. market. The car is based on the design of the FCX Clarity, the fuel-cell vehicle.

The Japanese auto maker says hybrid vehicles are a stepping stone to fuel-cell vehicles, which run on hydrogen and emit only water vapor. At this point, however, the vehicles are impractical because of the lack of infrastructure to support hydrogen production and refueling stations, Mr. Fukui said.

In July, Honda will begin the first large-scale effort to market fuel-cell vehicles with the launch of the FCX Clarity in southern California. The four-passenger sedan will available to about 200 drivers living near refueling stations in Santa Monica, Torrance and Irvine who sign up for a three-year, $600-a-month lease. In the autumn, Honda will start a similar program in Japan.

Honda has been less enthusiastic about electric vehicles, which rival Nissan Motor Co. has embraced as the best solution for the future, or plug-in hybrids, such as Toyota plans. Mr. Fukui says the batteries needed for these technologies aren't yet powerful enough to provide the driving range demanded by most consumers.

Write to John Murphy at john.murphy@wsj.com

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