Honda will not focus in on hybrid technology alone

John Mendel, Senior VP American Honda stated Hondas long term approach to fuel efficiency and environmental yesterday at the Center for Automotive Research. It seems Honda, while proud of what it has done in the past with hybrid technology, doesn't feel that it, alone, is the answer.

Honda will continue to make hybrid cars and introduce new hybrid cars, but will also increase the introduction of other alternative engines including diesel.

Mendel also emphasized the new hybrid car coming out in 2009. It will be a small, affordable hybrid. As he puts it, there is a "need for an affordable hybrid as a next generation people's car." In other words, the Accord Hybrid isn't selling well, but the Honda Civic Hybrid is. And it's fairly obvious why that is.

The Accord Hybrid was built as a 'performance' hybrid, capable of beating out its conventional all-gas engine counterpart in performance. The Honda Civic Hybrid was built emphasizing the fuel economy. Given how the Civic Hybrid has outsold the Accord Hybrid by more than 4-1 this year, I believe Honda is on the right track by building a small family hybrid car that is affordable.

Remarks by John Mendel, Senior Vice President, American Honda Motor Co., Inc.

Beyond conventional engine technology, Honda has taken the lead in a host of advanced technologies from hybrids, to natural gas and hydrogen fuel cell. But our strategy is not about pursuing the latest fad. And I would include hybrids in that statement. Now, be careful about what you just heard... I did not say hybrids are a fad. But I want to emphasize they are just one necessary approach.

I know people have wondered about our hybrid strategy - we have been questioned repeatedly regarding why we haven't joined those companies promising to sell 250-thousand to a million hybrids by the end of the decade. The reason is simple... Honda always proceeds with a sense of urgency, but we also have a patience that is born out of experience with technology. There are multiple solutions to the environmental challenge - and we have a responsibility both to our customers and our shareholders... and the answer is not necessarily hybrids for all model types. We did introduce America's first hybrid... and America's first mass-market hybrid... and America's first V-6 hybrid. In each case... we learned a lot about real world performance requirements and the needs of the customer. This has been a great advantage.

By developing the technology ourselves, and gaining real world experience with it, we aren't guided by another company's beliefs or technology timetable... and we fundamentally understand the technology so that we can continue to advance it ourselves. The Civic has the 4th generation Honda Hybrid System with new technology that increases horsepower and torque, yet is also more efficient.

Today, hybrids mean fuel economy - and that is really their greatest value... both when it comes to addressing CO2 reduction... and giving the consumer what they want... which is higher mileage. Toward this end, earlier this year, we announced plans to introduce a new, more affordable hybrid car. This was the result of a strong request from those of us at American Honda to Honda R&D.

We explained to them the need for an affordable hybrid as a next generation people's car. As a means to improve fuel efficiency, we determined that hybrid technology is most effective in smaller displacement vehicles. With the key understanding that the success of a small hybrid is based on offering it at an affordable price. Our R&D operations have taken on this challenge... and the new small hybrid vehicle will be launched in 2009... with a projected North American sales volume of 100-thousand units.