Honda drops off the Hybrid radar - for now.

Honda is dropping the hybrid version of the Honda Accord. Honda’s decision to place a hybrid system in the V-6 version of the Accord, rather than the more fuel-efficient four-cylinder vehicle, was a critical error. That decision—to use hybridization to offer greater performance rather than maximum fuel efficiency—came during the early days of the hybrid market. Honda took one on the chin for the entire hybrid market, learning a bitter lesson that hybrid buyers want fuel efficiency in a gas-electric vehicle.

The removal of the Accord Hybrid from the market follows Honda’s decision last year to discontinue the Honda Insight, the first hybrid to enter the market. While the Honda Insight was the reigning fuel efficiency king for six years, the two-seat teardrop designed vehicle was not practical for many car buyers. Unlike the Toyota Prius, a runaway hit because it strikes the right balance between practicality, adequate performance and superior fuel efficiency, Honda erred with the Accord Hybrid by falling below hybrid-level fuel economy levels and with the Insight because of impracticality.

As reported in the San Jose Mercury News:

The decision wasn't a surprise, as sales of the Accord hybrid have been tepid since it arrived in 2004. Most analysts blame the model's failure on Honda's decision to pair electric components with a V-6 engine instead of with a higher-mileage four-cylinder gasoline motor.

In the United States, Honda dealers sold just 5,598 Accord hybrids last year, and just 439 last month. Rival Toyota sold 24,009 Prius hybrids in May, the car's best sales month in history, and 106,971 in 2006.

"The cancellation of the Honda Accord hybrid points out the fact that hybrid manufacturers have largely been unable to expand the public's perception of hybrids beyond high fuel economy," said Jack Nerad, executive market analyst for Kelley Blue Book and its kbb.com Web site.

Mr. Nerad states the obvious point somehow missed by Honda with the Accord. The public expects hybrids to have high fuel economy. Honda learned that lesson the hard way. It remains to be seen if other carmakers will benefit from Honda’s mistakes.

To Honda’s credit, the company has apparently learned from its own miscalculations. The company will offer a new, smaller dedicated hybrid car—about the size of the Fit, but not based on that model—within two years. With the release of the yet-to-be-named new Honda hybrid, the company is likely to regain its position as producer of the most fuel-efficient vehicle available in the U.S. market.