Honda considers making hybrid cars in China

Japan's Honda Motor is mulling making hybrid cars in China, where regulators want more energy efficient vehicles to help combat the nation's choking pollution problem, state media said on Friday.

Honda plans to test demand in China for its Civic hybrid cars within three months, the Shanghai Daily reported, citing a deputy manager of Honda's China joint venture, Dongfeng Honda Automobile.

"It would be a trial operation to test the market response before localized production begins," the official was quoted as saying. Toyota, Honda's larger rival in Japan, became the first foreign car maker to produce hybrid autos in China with its Prius model in late 2005.

The make is sold at 288,000 yuan to 302,000 yuan (37,400- 39,200 dollars), and annual sales are expected to hit 3,000 this year. "Our hybrid Civic will have a price advantage against Toyota's Prius," the Dongfeng official said, although he could not provide a specific price.

"The market could become better for mass production if the government introduces more favourable tax policies to reduce driving costs for hybrid owners." Hybrid vehicles, which deliver power by switching between a gasoline (petrol) engine and an electric motor, can save up to 30 per cent on fuel costs but they cost 15 to 20 per cent more on average than conventional models.

Honda Motor sold a record 323,469 automobiles in China in 2006, up 25.9 per cent from the previous year. But the company has acknowledged that competition is fierce in China as more automakers look to sell cars in what is emerging as the world's second largest auto market after the United States.