Honda bets on hybrid future

Honda will have a new hybrid plant in operation by 2013 while abandoning plans for a mini-vehicle factory, according to a report by the Nikkei business daily earlier today.

Soon after the global financial crisis hit in 2008, Honda had announced plans to delay construction of the Yorii factory, north of Tokyo, and a separate plant for 660cc mini-vehicles in Western Japan, both of which were originally scheduled to start production in 2010.

The Nikkei report states that Honda will resume construction of its Yorii factory in the Japanese prefecture of Saitama "in light of rebounding demand in Japan as well as in the key market of North America", while scrapping plans for the second plant.

Honda had initially planned to build clean-diesel and other fuel-saving vehicles at the Yorii factory, but has since decided to use the plant to focus on the production of a new hybrid system designed to boost fuel economy for its larger vehicles. However, the specific models to be produced at the plant have yet to be determined.

Honda had earmarked about ¥50bn ($565 m) to build the mini-vehicle plant in western Japan, but now plans to stop developing commercial-use mini-vehicles to narrow its product line and focus increasingly on hybrids.

Honda chief executive Takanobu Ito, who took his post about a year ago, has said he wants to accelerate the rollout of hybrid cars as environmental regulations tighten around the world. He is scheduled to provide more details on Honda's medium-term strategy at a news conference next Tuesday.

Honda is continuing to battle with arch-rival Toyota for control of the fast-expanding hybrid market.

Honda was the first major carmaker to introduce a gasoline-electric hybrid car, the Insight, to the US market. In August, its new CR-Z hybrid will go on sale in the US, and it is also marketing a smaller Honda Fit model. The company also has plans to launch three hybrid models in China over the next two years.