Honda Diesels, Hybrids to Compete With Toyota's Prius (Update3)

May 18 (Bloomberg) -- Honda Motor Co., vying with Toyota Motor Corp. for buyers seeking fuel-efficient autos, will add U.S. diesel models and a new gasoline-electric hybrid by 2009.

Honda's new gas-electric car will seat five and be cheaper and smaller than its $22,150 Civic Hybrid, President Takeo Fukui said in Tokyo yesterday. The Japanese company's diesel engines will probably be available in several U.S. models, and the cars will travel at least 10 percent farther on a gallon of fuel than gasoline versions.

``Their strategy makes sense: Larger heavier, more expensive products get the diesel,'' said George Peterson, president of consulting firm AutoPacific Inc. in Tustin, California. Honda is going back to its roots with ``very high fuel economy cars that are very inexpensive to operate,'' he said.

Honda, the first company to sell hybrids in the U.S., is trying to match Toyota's success with its Prius model, the best- selling gasoline-electric car in the world. Consumers are turning to more fuel-efficient cars as gasoline prices approach record highs, and Honda sees an untapped market in diesels. story continued