FRANKFURT – Honda Motor Europe Ltd. will use the new European-spec '06 Honda Civic to try to take the model up-market.

The eighth-generation Civic was unveiled at the auto show here, where Honda Motor Co. Ltd. also stages the world debut of its '06 Civic Hybrid 4-door sedan. (See related story: Civic Hybrid Among Hondas Bowing at Frankfurt)

Both vehicles will go on sale in January.

The hybrid is powered by a new 3-stage i-VTEC (Variable Valve Timing and Lift Electronic Control) 1.3L engine using the fourth-generation of Honda's Integrated Motor Assist (IMA) system. Honda says the new system improves recovery of braking energy by 10% vs. the current Civic's IMA.

A European Honda spokesman says the auto maker hopes to sell 1,500-1,800 Civic Hybrids in Europe annually, with the U.K. to receive the lion's share at about 1,000 units.

'06 Honda Civic for Europe

He tells Ward's Honda began selling hybrids in Europe about five years ago, with the Insight, followed by the 4-door first-generation Civic Hybrid in 2003. Both were seen as compromise purchases in a market where hatchbacks are popular.

“You had to really want the technology to buy the car,” he says.

Honda President and CEO Takeo Fujui says the auto maker will expand hybrid technology to other models in Europe.

The expectation is Europe will offer the Accord Hybrid, but no launch dates have been set, the spokesman says.

Meanwhile, the new conventional European-spec Civic is expected to increase in price 5%-7% in a bid to make it a premium product, rubbing elbows with the Volkswagen Golf and Mercedes-Benz and BMW AG entry-level offerings.

Sales are forecast to be in the 110,000-unit to 120,000-unit range in Europe, with about 35,000 units for the U.K., volumes similar to those enjoyed by the current generation.

The eighth-generation Civic stays relatively true to the concept shown earlier this year at the Geneva auto show, with striking headlights and taillamps that span the width of the vehicle, and styling touches such as diamond-shaped inserts for the exterior door handles. These features do not appear on the Civic Si performance coupe for North America, and styling on Japanese-market Civics is different, as well.

The new 5-door for Europe is smaller and lower than its predecessor. The instrument panel in the modern cockpit wraps around the driver. Rear seats create flat loading space and a unique cargo floor conceals items stored beneath it, or it can be dropped down to reveal an under-floor compartment.

Powertrain choices include a new 1.8L billed as having the fuel economy of a 1.5L and performance of a 2.0L; a 2.2L i-CDTi diesel engine; and a 1.4L intelligent-dual and sequential ignition (i-DSI) mill the auto maker says emits no more than 230 gpm (143 g/km) of carbon dioxide. They are mated to the first 6-speed manual gearbox in the segment.

Honda assembles the Civic in 11 countries and sells it in about 160. The European model will be the third generation built at the flexible Swindon, U.K., facility, Honda's European plant.

Production of 80,000-90,000 CR-Vs annually in Swindon is being phased out over the next six months as volume ramps up of the new Civic, the spokesman says.

The expectation is a 3-door Civic model will follow in the future, as well.

Honda is targeting a 25% increase in annual vehicle sales by 2008, to 4 million units, resulting in sales revenue of ¥10 trillion ($89 billion) in the fiscal year ending March 2008, a 16% increase. In the last fiscal year, sales rose 8.7% to 3.24 million units, with total revenues of ¥8.7 trillion ($77 billion).

That is one tenet of a new 3-year business plan announced in July that also calls for Honda to become a leader in fuel-efficient vehicles, introducing a new VTEC system which will lead to a 13% increase in fuel economy over the 2005 i-VTEC level.

Also, Honda promises to increase the fuel efficiency of its Variable Cylinder Management (VCM) system 11% compared with the '05 V-6 engine with VCM.

Fukui has said the auto maker will continue to develop both gas-electric hybrid and fuel cell-powered vehicles. (See related story: Honda Wants 25% Sales Increase)