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Source: Bloomberg Radio - Automotive News

According to Bloomberg News, Honda will discontinue the Insight model in July due to lack of demand, and will build new plants in U.S. and Canada. The automaker is spending $665 million on growth; has a new hybrid car and diesel engine coming. Site selection for U.S. plant in final stages

DETROIT -- Honda Motor Co. will spend $665 million over the next two years to build a new auto assembly plant and expand engine and transmission production in the United States, and a new engine plant in Canada.

The new assembly plant will boost North American production capacity to 1.6 million units a year in 2008, Honda said. Currently, its annual North American production capacity stands at 1.4 million units.

The Japanese automaker also said it will introduce a new, dedicated hybrid car that will be cheaper than the current Civic Hybrid and have a sales target of 100,000 units a year in North America. Honda also plans to develop a new, four-cylinder diesel engine that will be sold in the U.S. and Canadian markets. The new diesel is based on a diesel engine Honda now sells in Europe.

Honda also has set a goal to boost the corporate average fuel economy rating of its fleet by 5 percent from 29.2 mpg rating in 2005 within the next four years.

The North America expansion plans are part of Honda’s bid to reach goals set out in its “2010 Vision” long-term plan, which was launched in 1998. Information on Honda’s global expansion plans was announced Wednesday morning in Japan.

Honda said the new U.S. auto plant will begin building vehicles in 2008. The auto factory, Honda’s sixth in North America, will have annual capacity of 200,000 vehicles and employ about 1,500 people.

Honda said it will spend $400 million to build the plant. But it did not say where the plant will be located or what it will produce. The automaker said its site search was in “the final stages.” The plant’s location and product will be announced later.

There is no mystery about the site of the new engine plant in Canada. Honda said the plant will be built next to its vehicle assembly plant in Alliston, Ontario. The engine plant will cost about $140 million and is set to begin building four-cylinder engines in 2008. It will have 340 employees and a capacity of 200,000 engines a year.

To supply the new auto plant with engines, and provide parts to the new Canadian engine plant, Honda will spend $75 million to expand its engine plant in Anna, Ohio. The expansion, which adds 40 jobs, will enable the Anna plant to produce engine parts that are now imported from Japan.

Honda is also spending $80 million and hiring 40 new workers for its parts plant in Tallapoosa, Ga. The plant will add the ability to cast and machine transmission cases.

New, cheaper hybrid on the way

Honda’s plant in Suzuka, Japan, will build a new, dedicated hybrid powertrain vehicle, beginning in 2009. The hybrid will play a key part in Honda’s quest to boost its fleet fuel economy average by 5 percent by 2010.

The Suzuka plant will have the capacity to build 200,000 hybrids a year. Honda said 100,000 of them will be earmarked for North America.

The new hybrid will have a price “significantly lower” than the Civic Hybrid, Honda said. The 2006 Civic Hybrid has a base price of $22,700, including shipping charges.

Honda officials said the new hybrid will be sold only under the Honda brand and not be shared with the Acura luxury brand.

Honda said it also plants to introduce a new version of its i-VTEC variable valve timing technology and a more advanced version of its VCM cylinder deactivation technology for six-cylinder engines to help meet its goal of increasing fleet fuel economy.

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