Honda to invest further in hybrids

Posted Dec 19th 2007 3:49PM by Eliza Popescu
Filed under: Forecasts, Consumer Experience, Competitive Strategy

Despite a shaky economy where recession concerns gain ground each day, car demand is booming for at least one major auto maker. Car maker Honda anticipates that even in a recession, people will continue to need cars, and from this point of view, Honda anticipates its global sales will jump 6% this year to a record 3.76 million vehicles, helped by strong demand in the U.S., Europe and Asia.

According to Takeo Fukui, the automaker's president, Honda plans to invest in research for hybrids and other new technology in Japan to face "the competition in hybrids" which has just begun. Let's remember that Toyota has already made the Prius, which is currently the top-selling hybrid.

Honda intends to create a new hybrid model that runs on gas and electricity, and its sales are expected to reach 200,000 vehicles a year. The company's strategy will be based more on hybrid offerings as overall hybrid sales are estimated to bring about 10 percent of Honda's sales in the next four years.

Looking ahead, the automaker forecast a North American sales growth of 3 percent to 1.59 million in 2008, and a rise of 3 percent to 1.55 million vehicles this year.

Since Honda already has such a strong reputation for providing more fuel efficient cars, the recent surge in oil prices helped Honda's sales and the company plans to increase its revenue by investing about $425 million in a new center in Japan to focus on hybrids and fuel cells research.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

Tags: car, competition, Honda, hybrid, inthenews