From: Reuters
Published January 13, 2008 10:59 AM

Honda CEO says clean diesel cars to be profitable

By Chang-Ran Kim, Asia auto correspondent

DETROIT (Reuters) - The head of Honda Motor Co said on Sunday that the Japanese automaker's yet-to-be released clean diesel cars will be profitable immediately, unlike expensive gasoline-electric hybrid cars that still yield little or no profit after a decade on the market.

"Our diesel cars are going to have an appropriate level of profit from the start," Chief Executive Takeo Fukui told a small group of reporters in an interview at the North American International Auto Show in Detroit.

He said Honda's clean diesel cars, to be launched in the United States next year, will not require a urea tank as most European systems do.

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The use of aluminum in the cylinder block instead of steel would also allow it to manufacture the engines using its existing gasoline engine facilities, keeping initial investments down, Fukui added.

Honda's new diesel drive train generates and stores ammonia within a two-layer catalytic converter to turn nitrogen oxide into harmless nitrogen.

The new system will clear the same emissions regulations as gasoline in the United States, Fukui said.

Japan's second-biggest automaker is set to announce later this afternoon the launch of its first ultra-clean diesel car in the United States in 2009, as planned.

Honda's premium Acura brand will be the first to get the four-cylinder diesel engine, Fukui said. Models fueled by V6 diesel engines will follow after 2010, he added.

Diesel cars now make up more than half of Europe's new cars but have a poor image among consumers in the United States, as well as Japan, as being both loud and dirty.

But Fukui said he expected Honda's sale of four-cylinder diesel cars to reach about 150,000 vehicles globally by around 2010 with the planned roll-out in the United States and Japan.

Honda now sells more than 100,000 diesel cars a year, all in Europe.

HYBRID PROFITS TO MATCH GASOLINE CARS

Honda is also due to begin selling low-cost hybrid cars in 2009. Half of the planned 200,000 units of the hybrid-only family car are bound for North America.

A new hybrid sports car is set to follow, while the mass-volume Civic series will also get the cheap and improved hybrid system with the next remodeling.

Fukui said he expected the new hybrid system would be as profitable as conventional gasoline cars, depending on the cars' selling price.

The chief executive has indicated that he wants to limit the price premium for consumers buying hybrid cars to around 200,000 yen ($1,800) to achieve the company's target of powering 10 percent of its global vehicle sales with hybrid cars by around 2010.

Honda produces its hybrid cars in Japan. While Fukui said he wants to build at least 80 percent of its cars sold in the United States in North America, he said he was not now thinking of local production of hybrids in the region.

"We may be thinking about local production (in North America) around 2011 or 2012 when our global hybrid sales reach 400,000 to 500,000 cars a year, but we don't think it's all that important," Fukui said without elaborating.

(Additional reporting by Kevin Krolicki)

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