Race to be clean and green

Honda's next hybrid is likely to be a hydrogen fuel cell vehicle.

Japanese carmaker Toyota, whose runaway success has fanned talk of a political backlash in the United States, has taken pains to highlight its focus on environmental and safety issues in the years ahead.

"Our main mission as a company is to contribute to a better society," President Katsuaki Watanabe, who took up his post last week, told a news conference held to introduce the company's new management team.

"We need to do much more in this field than we have been."

Watanabe's comments come at a time when Toyota and other Asian carmakers are luring customers away from General Motors and Ford, helping drive the top Japanese car brand towards its goal of selling a record 8.03 million vehicles worldwide this year, up 7 per cent from 2004.

The Detroit giants' troubles - stemming in part from huge employee health-care costs - have aroused worries in some quarters about possible political fallout, to the point that Toyota chairman Hiroshi Okuda suggested recently that price hikes might be needed to give GM and Ford room to "catch their breath".

Last month, US sales of the world's second-biggest carmaker grew 7.8 per cent, giving it 13.4 per cent of the market - less than one percentage point shy of Chrysler's 14.3 per cent. GM's sales, meanwhile, fell 5.5 per cent and Ford's were down 3.0 per cent.

As Toyota profits from rising sales in the US and other overseas markets, Watanabe said its second task was to ensure it was contributing to each country's social needs, such as by offering employment through increased local production.

He noted that so far this year, Toyota had kicked off a joint-venture car assembly plant in the Czech Republic, a diesel engine plant in Poland and a new car factory in China.

"As far as the US business goes, what we need to do is offer the kind of products that customers want and boost local production and procurement," he said.

In addition to a sixth North American car plant due to start up in Texas next year, Watanabe said an announcement on a seventh site in Canada was imminent.

Toyota has enjoyed robust sales growth in the US thanks to the popularity of its Prius petrol-electric hybrid car and other fuel-efficient models such as the Camry sedan.

Tokuichi Uranishi, the new executive vice-president in charge of overseas operations, said he expected sales of the fuel-sipping Prius to pick up also in Europe, reaching 25,000 to 30,000 units this year against an official target of 20,000.

But Toyota also sells gas-guzzling vehicles such as big sport utility vehicles and pick-up trucks, and said in an annual report filed with US regulators that tougher US fuel economy standards could hurt its bottom line.

Asked to comment on the apparent contradiction between Toyota's drive to offer "green" vehicles and the addition of less fuel-efficient products, Watanabe said only that the carmaker was developing cleaner versions of conventional petrol engines.

Meanwhile, Honda aims to cut the cost of hydrogen-powered fuel-cell cars to a hundredth of the present level to make them competitive with conventional cars.

Yozo Kami, chief engineer in Honda's research and development operation, said its fuel cell cars cost about 100 times that of typical petrol models to manufacture and it needed to slash that by a tenth to the level of high-end cars and eventually to a hundredth to make it more competitive against conventional alternatives.

Kami said fuel-cell cars could have a market share of 5 per cent by 2020.

Mass production of hydrogen vehicles came closer to reality last week when the Japanese Government approved certification of fuel cell cars made by Honda and Toyota. Honda, which started limited marketing of fuel-cell vehicles in 2002, is now leasing 19 such cars to government bodies and some firms in Japan and the US.

It will expand the leases to individuals in the US by the year-end.

Toyota leases 16 hydrogen vehicles in Japan and the US, charging more than 1 million ($12,776) a month.

A Toyota spokesman said that the introduction of the environmentally friendly cars to the mass market was unlikely until 2010 at the earliest due to high costs and the need to improve fuel cell storing technology to allow long travel.

A report out of Europe last week said that Toyota aimed to cut the cost of fuel-cell cars to US$50,000 ($70,000) from more than US$1 million ($1.4 million) by 2015.

GM aimed to have a production-ready hydrogen vehicle by 2010, with a fuel cell that cost $US5000 ($7000), it said.

- Additional reporting by agencies