Honda Lays Out Hybrid Fleet To Challenge Prius

HONG KONG -

Honda Motor, Japan's second-largest automaker, is a longtime also-ran against its largest rival, Toyota Motor, in the race to develop hybrid cars.

Not for much longer, apparently. Stubbornly high fuel prices, combined with rising concern worldwide over pollution and global warming woes worldwide and a growing appetite for hybrid cars in the United States, are catalyzing initiatives by carmakers to create fuel-efficient and environmentally friendly vehicles.

On Wednesday, Honda's President Takeo Fukui, in delivering the company’s midterm speech, threw down the gauntlet to Toyota (nyse: TM - news - people ), seeking to mount a serious challenge in the hybrid cars segment. The weapon Fukui chose was a lineup of four models, including Honda's sole current hybrid in production, the Civic Hybrid; a new hybrid-only model yet to be named, which will be a five-door, five-passenger compact, with an exterior design similar to its new fuel cell vehicle concept, the FCX Clarity; a hybrid sports car version of its CR-Z line; and a new hybrid model for its Fit compact cars, sold as the Jazz in Europe. Sketches of Honda's new hybrid ideas first appeared as early as October of last year. (See: "Honda To Hit Accelerator On Hybrid Production")

Consumers will not need to wait long. Fukui said the new five-passenger hybrid compact will go on sale in Japan, North America and Europe in early 2009, with expected annual global sales of 200,000 units. All told, Honda (nyse: HMC - news - people ) is aiming to achieve annual sales for all four models of about half of a million units some time beyond 2010. In short, Fukui concluded, the new hybrid strategy is to "achieve full-scale market penetration."

The mass market approach promises to yield more affordable prices for its hybrid cars, narrowing the price premium to as little as 200,000 yen ($1,741.31), down from 500,000 yen ($4,834.42) now, Fukui remarked. On an earlier occasion, he had mentioned that the hybrid-only model would be smaller than the Civic Hybrid but would also cost about one-third less.

By comparison, Toyota's top-selling hybrid, the Prius, just crossed the 1 million mark for worldwide sales last week. Honda's hybrid initiative is one of the three pillars of its three-year business plan that began April 1, which also includes expansion in the motorcycle business and innovations in manufacturing technology in its home base of Japan.

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