Are the Days Numbered for Honda’s CR-Z and Insight Hybrids?

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Despite having a hybrid program for roughly the same amount of time as Toyota (NYSE:TM), Honda’s (NYSE:HMC) partially electric offerings have never enjoyed the same kind of success that the Prius has, not just in the U.S., but globally. Due to a shortfall in sales, Honda is pulling the plug on the CR-Z hybrid and the Insight hybrid in Europe, leaving some uncertainties about the models’ futures stateside.

Despite a sales surge of 9 percent for the CR-Z in America last year, that only brought sales to about 4,550 units; sales for the Insight fell around the same, at 4,802 vehicles, though that represents an 18 percent slide over the year prior. As of the the first of this month, Honda was managing a 187-day supply of CR-Zs in the United States and a huge 237-day surplus of Insights — more than double the 99-day average for Honda’s range as a whole, according to Automotive News. 

Honda’s older hybrid vehicles have never lived up to their competition in terms of mileage and fuel economy. Despite being of similar proportions to the Prius, the Insight manages just 41 miles per gallon city and 44 on the highway, well below the Prius’s 51 city and 48 highway. The CR-Z, though, was built to balance hybrid efficiency and sporty performance but left many feeling that it lacked either.

However, as Hans Greimel at Automotive News reports, Honda’s decision to eventually cut the models from its U.S. lineup (despite the company indicating it has no plans to do so) is actually more based on the fact that the Insight’s dated drivetrain has actually been rendered obsolete by Honda’s own new system, rather than a competitor’s.

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The CR-Z isn’t likely heading anywhere anytime soon, given that it is virtually the only player in the sporty-hybrid scene. However, the Insight uses Honda’s now aging motor-assist hybrid system, which falls well short of the new one-motor system that is used in the redesigned Fit Hybrid hatchback (which we here in the States don’t have — yet) and the two-motor setup that’s found in the Accord hybrid sedan, Greimel says.

Throughout its life, the Insight has fulfilled a niche market position in Honda’s lineup and held its own as a practical hybrid vehicle. With its aging drivetrain, though, the Insight is more dead weight for the company’s range, as its weak U.S. sales hardly justify Honda making the effort to push the pricier vehicles to American consumers.

Greimel suggests that if Honda wants to continue selling a compact hybrid model in the U.S. slotted below the Civic Hybrid, then it would make more sense to shed the Insight in favor of the new Fit Hybrid, which is more efficient and already offers American buyers a Honda nameplate that they are familiar with and is not associated with the mediocre nature of the Insight.

The Fit Hybrid also manages fuel economy of “up to 36.4 km/liter (85.6 mpg) under Japan’s testing regime, compared with 27.2 km/liter (64.0 mpg) for the Insight,” Greimel writes.

The Fit Hybrid is also cheaper and offers more interior room than the Insight. In Japan, Insight sales have tanked to 3,880 units in 2013 from 8,905 the year before after the Fit Hybrid was released, indicating that it doesn’t make sense for the two to coexist.

With a new Toyota Prius scheduled to be revealed later this year and the steady growth of electric cars and extended-range plug-in hybrids, Honda will find the alternative fuel segment growing increasingly competitive, and it just can’t compete with its current offerings, aside from the Accord hybrid.

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