Hybrid race heats up for carmakers

By Bernard Simon in Traverse City, Michigan
Published: August 13 2008 19:00

The battle between Toyota and Honda for supremacy in the hybrid petrol-electric car market is set to heat up with both Japanese carmakers set to introduce distinctive new models early next year.
Honda disclosed details on Wednesday of a hybrid hatchback that will be smaller and cheaper than its existing Civic hybrid sedan.

Toyota is due to unveil a larger version of its popular Prius. It has so far kept a low profile on the new model to avoid damping sales of the existing Prius.
The Detroit carmakers are also stepping up their hybrid offerings. Ford is preparing to launch hybrid versions of its mid-sized Fusion and Mercury Milan sedans next year.
Dick Colliver, executive vice-president of Honda’s US unit, on Wednesday said: “The challenge, especially with small cars, is to bring the price down to where more people can afford it. And this is our goal for this new hybrid model . . . to make it affordable to a new generation of car buyers.”
Mr Colliver said that Honda aimed to sell 100,000 of the new cars a year in North America, including Canada.
Sales of the Civic hybrid in the US reached only one-third of that level last year, although demand last month was 38 per cent higher than July 2007.
Rebecca Lindland, an analyst at Global Insight, said: “One of the reasons Prius is so successful is that you can’t mistake it for anything else.
“If the Honda vehicle is only hybrid, they’re going to get the same bragging rights that Prius has now.”
Toyota sold 181,200 Priuses in the US last year and another 106,000 in January-July 2008. It is gradually winding down production ahead of the new model.
Toyota announced plans last month to convert an assembly plant under construction in Mississippi from slow-selling sport-utility vehicles to the Prius. Production is due to start in late 2010.
Ford said on Wednesday that it was setting up a 40-person team to equip its vehicles with new entertainment and other consumer electronics systems, in partnership with prominent technology suppliers.
The new group is part of a drive by Ford to improve the attractiveness as well as the profitability of small and mid-sized cars.
“These people will work at a clock speed that neither Ford nor the industry has seen before,” said Mark Fields, head of Ford’s North American operations.
Mr Fields said that Ford’s drive to integrate its global operations would also help boost the profitability of small vehicles in North America.
Copyright The Financial Times Limited 2008