Honda is looking to close the gap with pioneer Toyota Motor Corp with a new family of cheaper, more fuel-efficient gasoline-electric cars by slashing the cost and weight of its hybrid system.
Honda has said it wants to sell 200,000 units of the new Insight annually, half of that in North America. The car, which executives said they wanted to sell for less than 2 million yen ($18,500), will also be sold in Japan and Europe starting next spring.
Honda, which launched its first hybrid car, the Insight, in 1999, now only offers one hybrid model — the Civic — after halting production of the underpowered Accord hybrid.
In the first seven months of this year, Civic hybrid sales grew 27 percent globally from the year before to 39,361 units as consumers seek more mileage from dearer fuel.
Rival Toyota sold almost 280,000 hybrid vehicles in the same period for a rise of 8 percent, with supply falling far short of demand.
Toyota is also looking to step up its game by lowering the price premium on its third-generation Prius, to be shown at the North American International Auto Show in Detroit next January. The world's biggest automaker wants to sell at least 1 million hybrid vehicles annually soon after 2010, offering the hybrid option on all of its vehicles by 2020.