Honda’s Insight Hybrid Will Take On Prius

By dancurranjr On October 1st, 2008

Global auto makers are rushing to challenge the dominance of Toyota Motor Corp.’s Prius hybrid with a slew of ecofriendly vehicles. But Honda Motor Co. is likely to pose the most formidable threat to Toyota when it unveils its new Insight hybrid car Thursday at the Paris Auto Show.

Honda is betting that the five-passenger hatchback, set to go on sale next spring, will steal away Prius buyers by delivering greenness for fewer greenbacks. Honda has yet to disclose many details about the car or its cost, and it calls the car to be shown in Paris a concept, but it says Insight “will be priced significantly lower than hybrids available today.” Analysts expect the model will cost less than $20,000, undercutting the current $22,000 starting price of the Prius.

“It will be the first affordable hybrid for everyone,” says Tatsuo Yoshida, an analyst for UBS Securities Research in Tokyo.

New hybrid models are also on the way from Nissan Motor Co., Ford Motor Co. and General Motors Corp., among others. But Honda and Toyota have an advantage thanks to their substantial lead in developing hybrid technology, analysts say. Toyota, including its luxury brand Lexus, had a 79% share of the U.S. hybrid car and light-truck market in the January-August period this year, according to Autodata Corp. Honda was a distant second with 11% of the market, followed by Ford with 6%.

Other auto companies are also coming up with different fuel-efficient technologies, such as GM’s Volt, a plug-in hybrid, and Nissan’s planned pure electric vehicle. Chrysler recently announced plans to release an electric vehicle by the end of 2010. But these newer technologies are still untested, expensive and will be available only in small volumes at first, compared with the basic gas-electric hybrids like the Prius and the new Insight.
[Honda Insight charts]

Toyota says it aims to sell about 160,000 Priuses in the U.S. this year, while Honda expects to sell about 100,000 Insights domestically in that model’s first year.

Like the Prius, the Insight only will be available as a hybrid. That appeals to consumers who want to emphasize their ecofriendly credentials. By contrast, the hybrid versions of the Honda Civic, Ford Escape and Toyota Highlander look just like their gasoline-powered counterparts except for small badges saying “hybrid” on the side panels or rear.

Toyota and Honda designed different hybrid systems, each with different strengths. Toyota’s “full” hybrid setup weds a battery-powered vehicle with a gasoline engine. At slower speeds, the Prius can run on battery power alone. At higher speeds it switches mainly to gas power. In stop-and-go traffic in the city, the battery power gives it better mileage than on the highway.

Honda’s Insight will use a “mild” hybrid system. Its main power source will be a highly efficient, lightweight gasoline engine, but it will be assisted by battery power. Honda hasn’t released the projected mileage of the Insight, but it is expected to be higher than the Honda Civic hybrid, which gets 45 miles per gallon on the highway and 40 mpg in the city, according to Environmental Protection Agency ratings. The Prius also gets 45 mpg on the highway, but has a substantial edge in city driving with an EPA rating of 48 mpg.

Bruce Smith, a retired retailer in Orange County, Calif., who is a longtime owner of BMWs, drives 135 miles four times a week to look after his grandson, and wanted a fuel-efficient car. After doing research on the Prius and Honda’s Civic hybrid, which uses technology similar to what will be deployed in the Insight, he opted for the Toyota because it drives on battery power more than Honda’s offering.

“In stop-and-go traffic on our LA freeways, you can be going for five, 10 minutes or more just cruising along and the [gasoline] engine never starts” in the Prius, says the 55-year-old Mr. Smith. He says he gets 52 mpg on the highway and 54 mpg if traffic is heavy.

Toyota hasn’t been able to sate the market’s demand for the Prius and that should help Honda sell its Insight, says Aaron Bragman, an auto analyst at market researcher Global Insight Inc. “I think they’ll sell every one they make,” Mr. Bragman says.

For its part, Toyota says it welcomes the competition. “Any contribution heightening public awareness of alternative powertrains is welcome,” says Paul Nolasco, a spokesman for Toyota in Tokyo.

Honda was the first auto maker to introduce a hybrid to the U.S. with a two-seater, also called the Insight, in 1999. But it didn’t catch on like the four-seat Prius, and Honda eventually stopped producing the model.

Honda plans to introduce hybrid versions of other models, including a sporty compact car, with a goal of selling 500,000 hybrids a year world-wide by early next decade. Toyota, meanwhile, aims to reach annual sales of one million hybrids globally by the same time.

Source: Wall Street Journal

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