TOKYO: Honda Motor Co. is investing in hybrids and other technologies to tap growing consumer demand for environmentally friendly cars and keep its sales momentum going, the automaker's president said Wednesday.

Honda President Takeo Fukui made clear that his company has something to offer in gas-and-electric hybrids, and he brushed off Toyota's lead in the segment with the best-selling Prius.

''The competition in hybrids has just begun,'' Fukui said in a year-end speech.

Japan's No. 2 automaker will introduce a hybrid with an affordable price tag in 2009, targeting sales of 200,000 vehicles a year, he said.

Honda, which makes the Accord sedan and Civic compact, plans to boost its hybrid offerings in coming years so the segment accounts for about 10 percent of its sales by 2010, he said.

Fukui said Honda expects its global sales to rise 6 percent this year to a record 3.76 million vehicles from 3.55 million in 2006. He predicted sales growth will continue next year amid solid demand in the United States, Europe and Asia, as well as in Japan, where the company has been struggling but will introduce four new models.

Honda has fallen behind in the hybrid market. Earlier this year, it discontinued the gas-and-electric version of its Accord sedan It sold only in North America, and had totaled just 25,000 units since going on sale in 2004.

Last year, Honda ended production of the slow-sellingInsight hybrid.

In contrast, Toyota has sold about 900,000 units of the Prius worldwide since December 1997, and its popularity hasn't waned despite the model's being on sale for a decade.

Toyota offers several other hybrid models, including the hybrid Camry and hybrid Lexus, but Prius sales are far higher. The Prius made up more than 40 percent of hybrid sales in the United States last year.

Honda still makes gas-and-electric models of its Civic sedan. But it has acknowledged its error in not offering a hybrid-only model like the Prius, and not realizing that hybrids tend to be more popular with smaller models because mileage improvements tend to be more pronounced.

To maintain its technological prowess, Honda is earmarking $424 million for a new research center in Japan to focus on next-generation cars, including hybrids and fuel cells, Fukui said.

The center will be partially running by 2009, and fully open by 2010, and will also focus on research for new technology for models for Honda's Acura luxury brand, he said.

Hybrids, once dismissed by Nissan Motor Co. Chief Executive Carlos Ghosn and other auto executives, have become hot sellers amid rising gas prices and greater concerns about the environment.

Fukui said Honda's hybrid system costs less than Toyota's, which will allow Honda to offer its planned hybrid at a competitive price that he declined to give.

This year, Honda's sales in Japan, a stagnant market, declined 12 percent to 620,000 vehicles.

Honda did not give an overall global sales forecast for 2008. But Fukui projected North American sales to rise 3 percent to 1.59 million next year, adding to an expected 3 percent growth this year to 1.55 million vehicles.

This year, demand for the new Accord was robust in the United States, while in Japan the Fit subcompact was a hit, the company said.

Even in Europe, where Japanese automakers have been relative latecomers, Honda was posting good results — a projected 23 percent increase this year to a record 380,000 vehicles. The company forecasts that European sales will rise another 11 percent next year to 420,000 units.

With production expansions in Brazil and Argentina, Honda's sales are booming in South America; they are expected to jump 30 percent to 118,000 this year.

In China, sales are projected to climb 29 percent this year to 420,000 vehicles, Honda said.