The innovative hybrid car from Honda Motor Co. will be priced one fifth less than the cheapest hybrid in Japan, according to the Nikkei business daily.With a price tag of around 1.5 million yen ($16,570), this latest car will be the cheapest hybrid in Japan when it goes on sale this autumn. This move is observed by many to make hybrids to be low profit margin models for carmakers. Honda’s new hybrid car will be priced about 400,000 yen lesser than the Insight, another hybrid car that Honda has in its lineup. The new hybrid will cost 200,000 yen greater than Honda’s gasoline-powered Fit compact car.
Yoshihiko Tabei, an analyst at Kazaka Securities, said that the lower prices benefit consumers but are not excellent for shareholders. He explained that since the price is lower than what the market had estimated, this could effect to a price war with Toyota Motor Corp., placing both carmakers at a disadvantage when compared with those who only concentrate on gasoline-powered models that have higher margins.
He revealed that Toyota has only started enjoying profits on the Prius and Honda is “barely making profits” on the Insight. Honda’s fresh hybrid car will be based on the Fit and will have core components that are shared with the Insight.
As a result, Honda’s development costs are abridged. The Nikkei report also revealed that this new car can go 30 kilometers on a liter of gasoline, compared with the Fit’s 24 kilometers per liter. This price war between Honda and Toyota has gotten poorer since February 2009, when Honda debuted its Insight hybrid and Toyota instantly followed with the launch of its cheapest-ever Toyota Prius hybrid.
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