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Honda hopes CR-Z shows fun side of hybrids

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Honda hopes CR-Z shows fun side of hybrids

Japanese automaker hopes to move 15,000 CR-Zs on U.S. market per year at starting price below $20,000

Alan Ohnsman / Bloomberg News

Honda Motor Co.'s gasoline-electric cars haven't rivaled Toyota Motor Corp.'s Prius in sales, so it's trying a different tactic. With the CR-Z coupe, it's aiming to carve out a U.S. niche for a low-priced, sporty hybrid.

Honda, Japan's second-largest automaker, is targeting sales of just 15,000 CR-Zs a year. It goes on sale in August with a starting price of less than $20,000.

Instead of targeting Prius' volume or 50-miles-per-gallon rating, the two-seater CR-Z is intended to be a fun hybrid, said John Mendel, Honda's U.S. sales chief.

"It has the potential to be a kind of halo vehicle, not because of the volume it will do but because of the volume it doesn'tdo," Mendel said in a recent interview. "Nothing sells like a shortage."

The CR-Z joins Honda's lineup as the Tokyo-based company looks to accelerate growth in its biggest market amid a sluggish U.S. recovery. Sales of Honda and Acura models rose 13 percent this year through May, trailing an industrywide 17 percent gain and improvements of 30 percent and 23 percent for Asia-based competitors Nissan Motor Co. and Hyundai Motor Co.

The coupe has a 1.5-liter engine and will be available with a continuously variable transmission or a six-speed manual, a rarity among hybrids, Honda said.

The company expects average fuel economy of at least 37 mpg for the automatic version in city and highway driving, and 34 mpg for the manual.

The car's most expensive version, an EX model with a navigation system, will retail for less than $24,000, Mendel said.

Should demand exceed Honda's annual goal, there's some room to increase supply, he said, without elaborating.

U.S. hybrid sales grew 8.3 percent in 2010's first five months to 108,636 units, with Toyota's Prius accounting for 51 percent of the volume, according to data compiled by Bloomberg. Demand for the fuel-saving models cooled as gasoline costs remained stable during the past year and below 2008's surge, said Jessica Caldwell, senior analyst for industry researcher Edmunds.com.

Honda's annual target for CR-Z doesn't seem overly ambitious, said Caldwell, who is based in Santa Monica, Calif.

"There are also a lot more hybrid models, but there's also more competition from new types of small cars that cost less and offer fuel economy that's almost as good."

With the CR-Z, Honda is marrying two concepts that don't really go together: hybrid and sport, Caldwell said. Drivers who want sporty vehicles don't usually go for hybrids and vice versa.

The CR-Z, already on sale in Japan and Europe, is derived from the underpinnings used in Honda's Insight hatchback, and has an identical nickel-metal-hydride battery pack and hybrid components.

The Insight, released last year, sold only about a third of Honda's initial 90,000-unit U.S. goal. This year, the Insight is averaging monthly sales of just 1,750 units.

Like the Insight, the CR-Z has software that coaches drivers to improve fuel economy, with a display light around the center gauge that changes from green to blue depending on how efficiently the car is driven. It can also be shifted into Econ driving mode to further boost fuel economy or Sport mode to enhance performance by drawing more heavily on the battery pack and engine.

"The CR-Z will be promoted as fun and clean," said Steve Center, Hondas U.S. marketing chief. "People expect green from Honda. Right now we've got a bit of a fun deficit because we don't have the S2000, a roadster discontinued last year," Center said.

From The Detroit News: http://detnews.com/article/20100722/AUTO03/7220376/1148/auto01/Honda-hopes-CR-Z-shows-fun-side-of-hybrids#ixzz0uVdI1Esu

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