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Honda plans new hybrid push

The company says it will launch a new model in 2009 as part of a renewed assault on archrival Toyota.

TOKYO - Honda is investing in hybrids and other technologies to tap growing consumer demand for environmentally friendly cars and keep its sales momentum going, the automaker's president said yesterday.

Honda President Takeo Fukui made clear that his company had something unique to offer in gas-and-electric hybrids and brushed off Toyota's lead in the segment with the best-selling Prius.

"The competition in hybrids has just begun," Fukui said at a year-end speech at a Tokyo hotel.

Japan's No. 2 automaker will introduce a new hybrid with an affordable price tag in 2009, targeting sales of 200,000 vehicles a year, he said.

The company, which makes the Accord sedan and Civic compact, plans to boost its hybrid offerings in coming years so that the segment accounts for about 10 percent of Honda Motor Co. Ltd.'s sales by 2010, he said.

Fukui said Honda expected its global sales to rise 6 percent this year to a record 3.76 million vehicles from 3.55 million vehicles in 2006. He predicted sales growth would continue next year amid solid demand in the United States, Europe and Asia, as well as in Japan, where the company has been struggling but will introduce four new models.

Honda has fallen behind in the hybrid market. Earlier this year, it discontinued the gas-and-electric version of its Accord sedan - sold only in North America - which sold just 25,000 units since going on sale in 2004.

Last year, it pulled the plug on the slow-selling Insight hybrid.

In contrast, Toyota has sold about 900,000 of the Prius worldwide since December 1997, and its popularity has not waned that much despite being on sale for a decade.

Toyota offers several other hybrid models, including the hybrid Camry and hybrid Lexus models, although Prius sells far better. It made up more than 40 percent of hybrid sales in the United States last year.

Honda still makes gas-and-electric models of its Civic sedan. But it has acknowledged its error in not offering a hybrid-only model such as the Prius, and not realizing that hybrids tend to be more popular with smaller models because mileage improvements tend to be more pronounced.

To maintain its technological prowess, Honda is earmarking $424 million in a new research center in Japan to focus on next-generation cars, including hybrids and fuel cells, Fukui said.

The center will be partially running by 2009, and fully open by 2010, and will also focus on research for new technology for Honda's Acura luxury brand models, he said.

Hybrids, once dismissed by Nissan Motor Co. Ltd. chief executive officer Carlos Ghosn and other auto executives, have become hot sellers amid rising gas prices and greater concerns about the environment.

Fukui said Honda's hybrid system cost less than Toyota's, which will allow Honda to offer its planned hybrid at a competitive price. He declined to give a price.

This year, Honda's sales in Japan, a stagnant market, declined 12 percent to 620,000 vehicles. Four new models will be introduced in Japan next year to woo buyers, and sales are expected to grow here, he said.

Honda did not give an overall global sales forecast for 2008. But Fukui projected North American sales to rise 3 percent to 1.59 million next year, adding to an expected 3 percent growth this year to 1.55 million vehicles.

This year, demand for the new Accord was robust in the United States, while in Japan the Fit subcompact was a hit, the company said.

Even in Europe, where Japanese automakers have been relative latecomers, Honda was posting good results - a projected 23 percent rise this year to a record 380,000 vehicles. The company forecasts sales will rise an additional 11 percent next year to 420,000 units.

With production expansions in Brazil and Argentina, Honda's sales are booming in South America, expected to jump 30 percent to 118,000 this year. In China, sales are projected to climb 29 percent to 420,000 vehicles, Honda said.