Honda Reconsiders Hybrids for 2008 Sales Growth

By: Anthony Fontanelle

Honda Motor Company, Ltd., the second largest automobile seller in Japan, is reconsidering an investment on hybrids and other technologies to cope up with the growing consumer demand for environmentally-friendly vehicles and keep up its sales momentum.

According to Honda President Takeo Fukui, his company has something unique to offer in gas-and-electric hybrids. He ignored the fact that its leading rival in the segment, Toyota, is working so well with the Prius (currently the best selling hybrid) these days.

In a recent speech, Fukui said, "The competition in hybrids has just begun."

Fukui said that Honda will introduce a hybrid with an affordable price tag in 2009. The company's target sales are set at 200,000 vehicles a year.

The Japanese company - which produces the Accord sedan and Civic compact - plans to boost its hybrid offerings in the coming years. Fukui said that the plan is part of pushing the company's sales to about 10 percent higher by 2010.

Fukui mentioned that Honda expects a 6 percent increase in global sales this year at a record of 3.76 million vehicles, compared from 3.55 million units in 2006. Subsequently, he predicted sales growth to persist in 2008. He sees the solid customer demand in the U.S., Europe and Asia, including Japan, to where the company has been struggling. The auto maker is planning to introduce four new models in the said markets.

Earlier this year, Honda discontinued the production of the gas-and-electric version of its Accord sedan. The version was sold only in North America. Just about 25,000 units of it were sold since the company began the sale in 2004.

Toyota, on the other hand, sold approximately 900,000 units of the Prius worldwide since December of 1997. The popularity of the vehicle did not weaken for the past decade on sale.

Last year, the Prius covers more than 40 percent of hybrid sale in the U.S. Though it is far better selling than any other hybrids in the market, Toyota still offers several other hybrid models. That includes the hybrid Camry and hybrid Lexus models.

So far, Honda is still producing gas-and-electric models of its Civic sedan. But, the company is aware of its error in not offering a hybrid-only model such as the Prius. It somewhat regret the moment it did not realize that hybrids tend to be more popular with smaller models because mileage improvements tend to be more distinct.

Now, according to Fukui, Honda is considering an investment amounting to $424 million for a research center in Japan. It will be used to maintain its technological prowess through focusing on the production of next-generation cars, which includes hybrids and fuel cells. It will also focus on research for new technology intended for Honda's Acura luxury brand models, which will be equipped with quality parts such as the and other premium auto parts.

In 2009, the center is expected to be partially running. Then, by 2010, it will be fully opened.

Although Fukui declined to provide a price, he said that Honda's hybrid system costs less than Toyota's. This fact will allow Honda to offer its planned hybrid at a competitive and more affordable price.

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