Honda to sell low-cost hybrid car in 2007/08: paper
Wed Feb 22, 2006 1:44 AM ET

TOKYO (Reuters) - Honda Motor Co. <7267.T> plans to sell a low-cost hybrid
car, a version of its popular Fit subcompact, a Japanese daily reported,
signaling the auto maker's long-term commitment to the fuel-sipping
powertrain.

Japan's third-biggest auto maker aims to sell the Fit hybrid as early as
next year for around 1.4 million yen ($11,790), or about 200,000 yen more
than the gasoline-only version, likely making it the world's first hybrid to
cost less than 2 million yen ($16,840), the leading Japanese business daily
said on Wednesday.

The model could be launched in the business year starting April 2007 and
would be sold globally, the paper said.

A spokesman denied Honda had made any decision on whether to hybridise the
Fit, but added it had the technological wherewithal to mount its hybrid
system, which twins an electric motor and a conventional engine to save
fuel, on most of its vehicles.

Chief Executive Takeo Fukui has long said the price premium for a hybrid
over a gasoline-only car needs to fall below 200,000 yen ($1,680) for the
powertrain to go mainstream.

With hybrid systems still costing auto makers -- and customers -- thousands
of dollars, Fukui has said Honda had not made a strategic decision yet to
produce the gasoline-electric vehicles in big volumes, unlike rival Toyota
Motor Corp. < 7203.T>, which has aggressively promoted their proliferation.

A decision to offer a hybrid version of the mass-volume Fit -- Honda's
best-selling model in Japan and due to debut in the United States soon --
would suggest the auto maker is a step closer to committing to the
powertrain longer-term.

Honda also sells hybrid versions of its two best-selling cars, the Accord
and Civic, at a premium of around 300,000 yen ($2,525). Its hybrid-only
Insight coupe was the first gasoline-electric car to be sold in the United
States.

Honda is developing a smaller motor and battery to reduce the hybrid's cost
and weight, the Nihon Keizai said. It will twin the hybrid unit with a
one-litre engine for the Fit, the paper added.

Toyota also aims to halve the production and selling cost of a hybrid
system. It currently sells many of its hybrid models at a premium of around
500,000 yen ($4,200).

Honda, Toyota and Ford Motor Co. <F.N> are so far the world's sole
mass-producers of hybrid passenger cars. Laggards like General Motors Corp.
<GM.N> argue that hybrid systems are most suitable for large vehicles due to
the added weight from the extra components.

Compact cars are also generally fuel-efficient to begin with, and the extra
cost of a hybrid car may be more difficult to justify, depending on how much
can be saved at the pump.

The newspaper said the Fit hybrid would have fuel economy comparable to that
of the Honda Insight and Toyota Prius, which the auto makers advertise in
Japan as getting around 35-36 km to a liter (82-84 miles per gallon).

The most fuel-efficient gasoline-only Fit, with a 1.3-liter engine and
continuous variable transmission, gets 24 km to a liter (56 miles per
gallon).

($1=118.78 yen)

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