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Honda eyes $20,000 Insight in U.S.

Thu, 05 Feb 2009

The Honda Insight hybrid hatchback may have a sticker price under $20,000 in the United States--and Honda might build it here if U.S. sales hit and sustain the lofty target of 100,000 a year.

Both goals will be tough. The yen's surge against the dollar will make the $20,000 sticker a stretch for the five-passenger gasoline-electric car, which goes on sale in April in the United States as a challenge to the Toyota Prius.

And the global financial crunch and falling gasoline prices likely will further undermine demand in a weakening hybrid market.

U.S. hybrid sales fell 9.9 percent in 2008 from 2007. The 315,761 sold in the United States last year represented 2.4 percent of the total vehicle market, according to Automotive News research.

Speaking on Thursday at the Japanese launch of the vehicle, Executive Vice President Koichi Kondo said Honda is aiming for a U.S. price under $20,000.

The company is also sticking to an annual sales goal of 100,000 units in the United States and 200,000 worldwide, although it will be a harder mission during the economic downturn.

"We are still reviewing how many we can sell," Kondo said.

The Insight reaches Japanese showrooms on Friday and goes on sale in Europe next month.

Tight pricing

In Japan, the car starts at 1.8 million yen, or $20,052, and climbs to 2.10 million yen ($23,000) for the top of three trim levels. All models sport a 1.3-liter i-VTEC engine.

Overseas pricing is yen-sensitive because the car is made in Japan at Honda's Suzuka plant.

Months ago, when Honda unveiled its domestic target price of under 2 million yen, it came to around $19,000. But the yen's climb has pushed that dollar-denominated price to $23,395. Getting the sticker price below that of the Prius is seen as the key to its success.

The Prius starts at $22,000 in America and 2.3 million yen or about $25,622 in Japan.

At the launch, Honda President Takeo Fukui said he will consider manufacturing the car overseas if U.S. volume reaches and stays at 100,000 units a year.

But he warned that making hybrids outside Japan is difficult because they rely on special parts, such as batteries, that currently are sourced from suppliers in Japan.

"They are not as easy to produce as other models," Fukui said.

Civic would lead way

If Honda moves hybrid production offshore, it likely would begin with the Civic Hybrid, he said. That is because the base model of the Civic already is being made in other countries.

Separately, Fukui said he sees hybrids, electric vehicles and other green cars accounting for 10 percent of the global auto market by the early 2010s, up from about 3 percent now.

In Japan, Honda is enlisting the "Peanuts" cartoon characters to market the Insight under the slogan "Honda Green Machine." Charlie Brown, Snoopy and the rest of the gang will be shown fawning over the wedge-shaped car in a nationwide TV and newspaper ad campaign.

By Hans Greimel- Automotive News