Honda looks to China, India; no plan for Nano rival

By Devidutta Tripathy

NEW DELHI (Reuters) - Honda Motor Co is not betting on an immediate recovery in traditional markets and will focus on bright spots China and India, although it will not build an ultra low-cost car to take on Tata Motor's Nano.

Chief executive Takanobu Ito said on Wednesday that Japan's second-largest automaker was researching a new compact car for Asian markets and more specifically for India, where it launched its first small car, the Jazz hatchback, earlier this year.

"We are still undergoing tough times in many traditional markets," Ito told reporters in the Indian capital.

"I wish I had the magic to predict these numbers," he said when asked about a recovery in these markets.

"In terms of business planning, we are not predicting an immediate recovery to their original levels."

Honda's Japan operations are expected to stay in red though demand has been brisk, helped by generous tax reductions and incentives on hybrids such as its new Insight model.

U.S. sales spiked temporarily in August helped by the cash-for-clunkers programme, but the impact was short-lived and followed by a sharp slump in demand the following month.

"Our top priority is on China and India, where we would like to grow the size of our business as much as possible," Ito said.