Honda Will Add New Sport Utility Vehicle and Readies for Launch of Accord Hybrid

DETROIT September 7, 2004; John Porretto writing for the AP reported that Honda Motor Co. will expand its lineup of sport utility vehicles with a new model from the Acura luxury division, even as the Japanese automaker says its focus is on fuel economy and it considers other hybrid models.

Takeo Fukui, Honda's president and chief executive, told members of the Detroit Economic Club on Tuesday the company will begin making the new Acura SUV in Ohio in 2006, but he declined to say whether it would be built at Honda's plant in Marysville or the one in East Liberty.

Company officials said the new vehicle will be smaller and cost less than Acura's MDX SUV.

Honda spokesman Ed Miller said production of the vehicle is not expected to result in more jobs at Honda. But he said it will help provide job security as market demand changes.

"In today's competitive business, it's become mandatory to be able to produce multiple numbers of vehicles on the same assembly line," Miller said.

Honda, which marks 25 years of U.S. manufacturing this month, already makes the Accord, Civic, Element and Acura TL models at its Ohio plants. The company, Japan's second-largest automaker, also builds vehicles in Alabama.

Meeting with journalists after his presentation, Fukui said Honda's focus was on using its highly flexible plants and fuel-efficient engines to produce vehicles like the new Acura SUV and an upcoming sport-utility pickup.

Among the top six automakers in the United States, Honda is the only one without a pickup. But Fukui said the company has no current plans to launch a full-fledged pickup truck in the U.S. market.

The company has said the sport-utility truck "combines the utility of an open cargo bed with the interior space and functionality of an SUV." Honda is expected to show a production version of the SUT in the spring.

In a recent research report, Merrill Lynch analyst John Casesa said the new SUT, to be based on the Honda Pilot platform, "should be popular among Honda loyalists."

On the car side, Honda is preparing for the introduction of a gas-electric hybrid version of the popular Accord sedan this fall. It will join hybrid versions of the Civic and Insight cars in Honda's portfolio. Honda builds its hybrids in Japan.

Honda has not announced pricing for the Accord hybrid, but analysts say it likely will be roughly $2,000 more than the base price for a conventional Accord. A fully loaded Accord EX sells for about $28,400.

Fukui said Honda's hybrid engines are a better match at present for smaller vehicles and not hybrid versions of SUVs such as the new Ford Escape and the upcoming Lexus RX400h.

However, asked about Honda's hybrid plans, Fukui said, "I would imagine that more vehicles will have hybrid versions."

For the first eight months of 2004, Honda's U.S. vehicle sales were roughly flat from a year ago. Toyota Motor Corp., Japan's biggest automaker, was up 9 percent for the same period, while No. 3 Nissan, riding the launch of several new vehicles, was up 23 percent.