Oct. 25, 2007: Source – Bloomberg

Honda CR-Z Hybrid Concept

Honda recently unveiled its CR-Z concept compact hybrid sports car. But the lion’s share of growth in Honda’s hybrid sales is expected to come from a new, more practical, efficient and affordable hybrid sedan.

Honda reported this week that it plans to expand its hybrid sales dramatically in the near future. Honda President Takeo Fukui predicted just three years from now, hybrids will account for 10 percent of Honda’s global sales volume. Fukui explained that an expansion in Honda’s hybrid lineup would fuel the sales growth. Honda currently offers just one hybrid model—the Civic Hybrid—but will add a second model by the end of 2009. The new hybrid, rumored to be based on the Fit/Jazz platform, will be a hybrid-only car that seats five passengers—and could become both the most efficient and most affordable hybrid. Speaking at the Tokyo International Auto Show, Fukui also announced plans for a compact hybrid sports car, based on the CR-Z concept.

It remains to be seen whether Honda can really attain such ambitious sales goals. Last year, just 2.8 percent of Honda vehicles in the U.S. were hybrids, and penetration in markets overseas was far lower. Offering a distinctive, hybrid-only model (as Toyota has done with the Prius) may boost sales, although only if the new Honda hybrid provides something that its competitors do not. Launching in late 2009 is particularly risky: by then, Toyota is likely to have an updated Prius with freshened styling, higher fuel economy, and better performance. Sales of an updated Prius could easily erode Honda’s sales target, which is set at roughly 200,000 units for the new hybrid-only model.

If Honda’s new hybrid has a secret sauce, it may be cost. Fukui revealed that Honda was working hard to lower the production costs of hybrid drivetrains. He confessed that the current Civic Hybrid was “pretty much hand-made” and acknowledged that Civic Hybrid sales were not profitable for the company. But a lower-cost hybrid powertrain could change that, making Honda more willing to produce larger volumes of hybrid cars, and making hybrids more affordable for consumers.

Fukui cited a target hybrid premium of $1,750 but did not say whether Honda had already reached this goal. If it has, the upcoming hybrid-only Honda model could combine high fuel economy with very low cost. The current ,a href=”https://www.hybridcars.com/vehicle/honda-fit.html”>Fit, for example, starts at about $14,000, so presumably a hybrid model would cost just $15,750. A hybrid at that price could attract new buyers into the hybrid marketplace, including younger buyers who are interested in hybrid technology but are not willing to spend more than $20,000 for a Prius, Civic Hybrid or a hybrid SUV.

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