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Honda Plots U.S. Hybrid Resurgence Starting With Accord

Honda Motor Co. (7267), first to sell hybrids in the U.S., plans a gasoline-electric lineup overhaul starting with an Accord Hybrid it says tops Toyota Motor Corp. (7203) and Ford Motor Co. sedans as it seeks relevancy in the segment.

The 2014 version of Tokyo-based Honda’s flagship sedan goes on sale Oct. 31, with a base price comparable with a V-6 engine version of the Accord, and that’s rated as getting 50 miles (80 kilometers) per gallon in city driving. That’s just the start, said John Mendel, executive vice president of the U.S. unit.

Honda needs better-selling hybrids. Current models, including the Insight hatchback, CR-Z coupe and a version of the Civic, generate a fraction of Prius deliveries. Honda’s Insight beat the Toyota hybrid to the U.S. by about six months. Yet the company that led U.S. fuel economy ranking for years stumbled in designing a compelling challenger to Prius.

“Accord is a great place for us to stop the science experiments and really make a name for our hybrids,” Mendel said in an interview in San Antonio last week. “We’re known for fuel economy, but in hybrids, it’s about relevance and volume. We think Accord can do that.”

The Accord Hybrid’s label rating, a combined 47 mpg in city and highway driving based on U.S. government tests, ranks it behind only Prius, a mid-size car that averages 51 mpg in the city, 48 mpg on the highway and 50 mpg combined, the best of any non-rechargeable vehicle in the U.S.

Photographer: Jonathan Alcorn/Bloomberg

A man sits in front of Honda Motor Co. Accord plug-in hybrid vehicle during the LA Auto Show in Los Angeles. Close

A man sits in front of Honda Motor Co. Accord plug-in hybrid vehicle during the LA Auto... Read More

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Photographer: Jonathan Alcorn/Bloomberg

A man sits in front of Honda Motor Co. Accord plug-in hybrid vehicle during the LA Auto Show in Los Angeles.

While Ford (F)’s Fusion hybrid is also rated 47 mpg combined, Ford faces lawsuits claiming the car’s mileage is overstated. Toyota’s hybrid Camry averages a combined 41 mpg.

Prius’ Shadow

Toyota expects to sell 250,000 Prius models this year. By comparison, Honda’s current hybrid line is on a pace to sell about 19,000 vehicles this year.

Combined sales of hybrids, plug-in hybrids and battery-only autos are headed for a record this year. Through September U.S. car buyers bought about 450,000 such vehicles, based on data compiled by Bloomberg, up 28 percent from about 352,000 a year earlier. Last year was a record for electric-drive vehicles, with sales of about 475,000 cars and light trucks.

Honda anticipates sales of Accord Hybrid, priced from $29,155 to $34,905, will fall in the “2,500 to 4,000” units per month range of Ford’s Fusion Hybrid and the Toyota Camry Hybrid, Mendel said.

The Accord Hybrid’s new two-motor powertrain has components adapted from Honda’s futuristic FCX Clarity hydrogen fuel-cell sedan and battery-electric Fit EV, Hiroo Shimada, the chief engineer who oversaw development of the Accord system, said in an interview.

Accord Sales

The Accord is the second-best-selling mid-size sedan in the U.S. this year, with 282,102 deliveries, behind Camry’s 318,990. The pattern has changed little for more than a decade.

Following the Accord, the company this year also releases a three-motor, all-wheel drive “sport hybrid” version of the premium Acura RLX sedan. A variation of its so-called SH-AWD powertrain will also be used in the 2015 NSX supercar Honda plans to build in Ohio, the company said.

For lower-priced small vehicles, Honda has a new single-motor, dual clutch powertrain that’s being used first on a version of the new Fit subcompact that’s gone on sale in Japan.

There’s no plan to sell Fit hybrids in the U.S. Still, the car’s gasoline-electric system may appear on other models, Mendel said.

“It’s a surprisingly fuel-efficient system,” he said.

New Models

New Honda and Acura hybrids are in the works, in part to help the company comply with the U.S. government’s push to double the average fuel efficiency of new vehicles by 2025, as well as to address volatile fuel prices, Mendel said. The company also wants to burnish its reputation as an industry leader in fuel economy and advanced technology, he said.

Accord Hybrid “can be a great entry point to establish our manufacturing prowess and development expertise in the hybrid area,” Mendel said. “Fifty miles a gallon is going to cut through.”

Honda’s American depositary receipts fell 1.2 percent to $37.91 at the close yesterday in New York. They have gained 2.6 percent this year, compared with a 14 percent advance in the benchmark NYSE Composite Index.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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