Honda Hybrid Car Strategy is smaller affordable Hybrids

Speaking at the Center for Automotive Research - Management Briefing Seminars 2006 - John Mendel, Senior Vice
President, American Honda Motor Co., Inc. presented some clear indication of Honda Motors Hybrid Strategy.
Honda has not been as forthcoming about their Hybrid Strategy as other manufacturers. A point acknowledged by
Mendel. "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," explained Mendel.Honda's hybrid technology experience is considerable. Honda became
the first manufacturer to offer a gas-electric hybrid vehicle in North America with the launch of the futuristic looking twopassenger
Insight in December 1999. Despite their early entry to market, manufacturers such as Toyota have gleaned
much of the recent hybrid limelight. Honda it seems is content to proceed with their strategy in a quite and confidant
manner. And the focus of their hybrid strategy is the smaller car. "As a means to improve fuel efficiency, we determined
that hybrid technology is most effective in smaller displacement vehicles," states Mendel. Honda is focusing its
technology on satisfying the customer. "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." said
Mendel "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." Reducing the hybrid car premium,
which often amounts to thousands being loaded onto the price sticker, is a key marketing goal for Honda America. A goal
they stalwartly expressed to Honda R&D "We explained to them the need for an affordable hybrid as a next generation
people's car. 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." said Mendel. Honda like other major manufacturers is
following a multiple technology strategy in order to address the environmental challenge. "Beyond conventional engine
technology, Honda has taken the lead in a host of advanced technologies from hybrids, to natural gas and hydrogen fuel
cell." says Mendel. In 2001, Honda became the first automaker in the world to market a fuel cell vehicle certified by the
U.S. EPA and the state of California. In August 2005, Honda sets advanced-technology and environmental standards by
offering the first fuel cell powered car to a family in California. Honda is looking to diesel technology to provide fuel
efficiencies for larger vehicles. Honda is currently working on the development of V6 diesel engine technology. No
timeframe has been established for its introduction. So no plans for a Honda Hybrid SUV - not so surprising, given the
current shifts in consumer trends. What really has us all on the edge of our seats is the anticipation of the 2009 hybrid
price sticker. During the Mid-Year Speech, Takeo Fukui, President and Chief Executive Officer, Honda Motor Co., Ltd
said Honda planned to offer their newest hybrid in the U.S. and Canada at a price level lower than the Civic Hybrid. Will
the 2009 Honda Hybrid be the first hybrid unburdened by a hefty price premium? We will certainly keep you posted.

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