Honda taking the Hybrid Challenge

By Anthony Fontanelle

Honda Motor Co., the largest engine-maker in the world and the second largest automobile manufacturer in Japan, is taking the tough hybrid challenge against another Japanese auto giant – in fact, the second largest auto maker in the world – Toyota Motor Corp. in hybrid technology.

In 1999, Honda brought the first gas-electric hybrid – the Insight - to America. Unfortunately, it was soon overshadowed by the Toyota Prius, today’s top-selling hybrid in the world. But still, Honda is trying to catch up ever since.

After eight years playing second behind Toyota, Honda has decided to push its limit in hybrid technology.

According to Honda president Takeo Fukui, the company is investing heavily in hybrids. He claims that the race “has just begun”. He mentioned that the first phase of the technology was all about cultivating green image. The next phase will focus on making the vehicles more affordable and fuel efficient. He said that Honda, so far, has two cars in the pipeline that are likely to challenge Toyota’s eco-supremacy.

Fukui said that about 79 percent of the gas-electric vehicles that rolled out of American showrooms last month were from Toyota. Only about 10 percent were from Honda. The fact was due to the discontinuation of the Insight and Accord hybrid production.

Fukui predicted that hybrids will cover approximately 10 percent of Honda’s sales by 2010. To attain that goal, Honda will need to have 400,000 hybrids sold annually. But, it may not be enough to catch up, considering that Toyota is planning to sell 1 million hybrids a year within the first half of the next decade.

Toyota Prius is a tough player, the toughest actually. It accounted half of the hybrids sold in America last month. Toyota sold 167,000 units of them in the first 11 months of the year – compared with 32,610 units of hybrid Civics, Accords and Insights.

Fukui admits the mistake of offering hybrid versions of Honda’s best-selling cars rather than designing a new car. He said that it is because “until now, it has been an image-based competition, not a business-based competition”.

Another point of defeat for Honda is the pricing, not with the Acura CL coil springs or other individual parts, but with the entire hybrid vehicle. Toyota Prius costs $21,100, while Honda Civic hybrid costs $22,600. Thus, Fukui said, “The price needs to be reasonable and fuel efficiency higher so the (premium) the consumer pays can be returned in a short period of time.”

Honda will offer a subcompact hybrid in 2009, Fukui confirms. It will be provided with a smaller, lighter engine for improved fuel economy and lower price than the Civic hybrid. The company is also planning to launch a hybrid sports car based on the CR-Z concept, which has been unveiled earlier this year at the Tokyo Auto Show and will also be features at the upcoming North American International Auto Show in Detroit. It is also investing $425 million for a new research center, which will focus on developing the “next generation” of automobiles, including hybrid and hydrogen fuel cell vehicles such as the FCS Clarity.