Honda to Expand Hybrid Lineup

Japanese Car Maker Plans Two New Models Amid Tough Competition From Rival Toyota
By YOSHIO TAKAHASHI and JOHN MURPHY
TOKYO -- Honda Motor Co. on Monday said it plans to launch two new gasoline-electric hybrids next year, part of the Japanese car maker's aggressive push to expand its hybrid lineup and boost its flagging sales.
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Honda Chief Executive Takanobu Ito, answering questions in Tokyo Monday after the company announced two new hybrid models, says all new vehicles could be hybrid-propelled in 20 years.
Honda -- No. 2 by sales among hybrid makers after leader Toyota Motor Corp. -- in February will launch the CR-Z hybrid sports car plus a hybrid version of its Fit compact by the end of 2010, both in Japan. The CR-Z hybrid will eventually be sold in the U.S. and Europe, but there are no plans yet to sell the Fit hybrid overseas.
Hybrid-car sales have been gathering momentum in Japan this year thanks to lowered prices of recently introduced models as well as tax breaks for fuel-efficient vehicles. Honda's new Insight hybrid, which has been marketed as an "affordable" hybrid at $20,000, has become a best seller in Japan.
Now Honda is eager to use its hybrid technology in other compact car models like the Fit while also developing a new hybrid system for midsize and larger vehicles.
"We want to focus on how quickly we can widen our hybrid lineup," said Honda President and Chief Executive Officer Takanobu Ito, speaking Monday at his first press conference since his appointment last month.
Honda continues to face tough competition from Toyota, which has dominated the hybrid market. Its redesigned Prius has outsold the Insight in Japan and abroad.
Other major car makers, such as Daimler AG, also plan to release more hybrid vehicles because of the promising market outlook. Global sales could grow to 11.28 million vehicles by 2020, well above the 487,000 hybrids sold in 2008, according to an estimate by J.P. Morgan.
As the second-largest maker of hybrids after Toyota, Honda hopes its hybrid sales drive its recovery after it posted its first quarterly loss in 15 years in March. Mr. Ito said all new vehicles may be propelled by hybrid systems in 20 years' time as demand for low-emission cars accelerates.
Mr. Ito is also looking to the emerging markets to lift Honda's motorcycle and car sales. Unlike his predecessor, former Honda President and CEO Takeo Fukui, Mr. Ito said he wants Honda to enter the fast-growing, ultra-low-cost vehicle market in India and other parts of the developing world.
Mr. Fukui had insisted that Honda's broad motorcycle lineup offered the best, inexpensive entry-level transportation for first time drivers. But the growing demand for Tata Motors Ltd.'s $2,500 car, the Nano, and plans by other car makers to produce inexpensive vehicles pose a threat that must be answered, Mr. Ito said.
Write to Yoshio Takahashi at yoshio.takahashi@dowjones.com and John Murphy at john.murphy@wsj.com