automotive

Honda To Unveil Second-Gen Insight Next Month

Honda InsightHonda is gunning for Toyota's Prius with a new version of the first hybrid, the Honda Insight. Honda says the new Insight will be cheaper than any other hybrid out there. Coming out next spring, it will precede a second hybrid, to be called CR-Z. 

The new Insight, the near-production version of which will be unveiled at the Paris International Auto Show next month, looks nothing like the original. And it resembles no other mass-market Honda car. The original Insight, which debuted in 1999, was a two-seater notable for fairings that covered the rear wheels and for its mileage, which approached 70 mpg. The new one, a five-door with fold-flat rear seats, looks like the Honda FCX Clarity fuel cell concept.

Toyota's launch effort for the second-generation Prius back in fall of 2003 promulgated the notion that the new car offered the benefits of a hybrid with none of the sacrifices--a jab at the two-person, first-generation Insight and perhaps, Toyota's own first-gen Prius. A spokesperson for the Torrance, Calif. automaker says Honda is doing that and more, by offering the car at a bargain price--for hybrids. Prius starts at around $22,000. A new Camry can be had in the $17,000-$18,000 range.

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Daniel Gorrell, president of Tustin, Calif.-based Gorrell Group, says that the price differential between hybrid and non make appearance critical: if one is going to pay a premium for a hybrid, it had better be unique. "What has held Honda back is having a hybrid product that isn't unique enough. The Insight will do that," he says. "Hybrid versions of existing body styles don't address all the reasons people buy hybrids; people buy hybrids for the uniqueness and the bragging rights."

Indeed, Prius far outsells any of Toyota's other six hybrids. Of the 185,051 hybrids Toyota has sold through August, 119,688 were Priuses. Last month, Toyota sold 19,529 hybrids. Of those, 13,463 were Priuses.

Honda has not announced pricing for the new Insight, but says it will be lower than that of other hybrids on the market. "From this unique position in the marketplace," said the company, "the Insight will advance the affordability and accessibility of hybrid technology to a new generation of buyers." Honda says the vehicle will have five-door access and folding rear seats that "speak to functionality that is designed to meet the needs of customers with an active lifestyle."

Honda sold 25,577 hybrid Civics YTD through August, and has modest sales goals for the Insight, at least by Prius standards--100,000 units per year in the U.S. The company is aiming for global hybrid sales to be 500,000 units a year, or more than 10% above current.

Gorrell says the real challenge for the hybrid market is not only competition from within the segment but from high-tech, low-displacement engines, diesel, and other options. "There's an educational process, and people are wising up to the fact that non-hybrid vehicles can be just as fuel-efficient. The new Honda Fit is expected to get close to 40 mpg. That's the kind of fuel economy you get with hybrids. So, why pay more?"

Jesse Toprak, lead auto researcher at Edmunds.com, says that the hybrid market won't go away anytime soon. "Demand will be quite strong, at least for the next one or two years," he says, adding that hybrids are only about 2% of the U.S. auto market. "But they are selling well, with no incentives, especially those, like Toyota's hybrid Camry (which is about the same price as the non-hybrid model) priced $2,000 or less above the non-hybrid models."

He says that pricing will be the key to volume. "Honda Insight will have mass appeal if it is practical and affordable."

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