Oct. 24 (Bloomberg) -- Honda Motor Co. expects hybrids to account for 10 percent of its global vehicle sales by 2010, as much as five times the current level for the world's second- largest maker of gasoline-electric vehicles.

The carmaker has an overall sales target of 4.5 million vehicles for 2010, President Takeo Fukui said at the Tokyo International Automotive Conference today. The hybrid surge, to as many as 450,000 units, will come from a new five-seat gasoline-electric car due in 2009 and a compact sports car based on the CR-Z concept model unveiled today, Fukui said.

Honda has lagged behind Toyota Motor Corp., the world's largest hybrid seller, since Toyota introduced the Prius in 1997. Toyota will sell about 400,000 hybrids worldwide this year and expects the level to reach at least 1 million a year by the early 2010s. Rising fuel prices and stricter emission rules have boosted sales the past three years, particularly in the U.S.

``What Honda needs is a hybrid with much better performance than the Toyota Prius,'' said Koichi Ogawa, who helps oversee $28 billion at Daiwa SB Investments Ltd. in Tokyo. ``Smaller cars will continue attracting more customers, because they are more fuel-efficient.''

Honda has said it expects to sell at least 200,000 units globally of the new, as yet unnamed five-seat hybrid, with the Civic hybrid and the new sports car model contributing the rest.

The U.S. will probably account for about half of those sales, John Mendel, executive vice president of Honda's U.S. unit, said in an interview today. ``It's obvious that we'll have a lot of that volume,'' Mendel said.

Honda released its Insight hybrid in 1999, two years after Prius, the world's first hybrid car. The Insight was discontinued last year. Honda currently sells fewer than 100,000 hybrid vehicles a year.

Honda raised its full-year profit forecast in July after demand for fuel-efficient models in the U.S. and a weaker yen boosted first-quarter earnings 16 percent.

Net income probably jumped 45 percent to 185.2 billion yen ($1.6 billion) for the three months ended Sept. 30 from 127.9 billion yen, according to the average estimate of five analysts surveyed by Bloomberg.

Honda's shares rose 10 yen to 3,790 yen at 1:38 p.m. on the Tokyo Stock Exchange. The Tokyo-based company releases quarterly results tomorrow.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net

Last Updated: October 24, 2007 00:59 EDT