Honda is to take “prompt action” against increased market demand for smaller, more environmentally friendly cars by launching several new models over the next 10 years.

In his annual mid-year speech, CEO Takanobu Ito said Honda had reached a stage where it needed a new strategy if it was to remain competitive in established and emerging markets.

His plans include “multiple” models offered with Honda’s IMA hybrid system, a new plug-in hybrid vehicle for the US and Japan in 2012, electric cars on sale by 2012 and further development of its FCX Clarity hydrogen vehicle.

Ito said Honda must “provide good products to our customers with speed, affordability and low CO2 emissions”.

“Consumer preference has quickly shifted towards smaller sized vehicles in every market around the world,” said Ito. “Honda must quickly respond to such changes in the times to achieve further growth and expansion in the future.”

There will be a “widespread market introduction” of models equipped with IMA in Japan within the next year to sit alongside the Insight and CR-Z. These models will mainly be “small-sized” vehicles; the Fit (Jazz) hybrid will be launched this autumn.

Honda has also confirmed the next-generation Civic Hybrid will be the first Honda to use a lithium-ion battery pack, rather than the nickel-metal hydride pack previously seen on its hybrid models.

Honda’s first plug-in hybrid car will launch in Japan and the US in 2012 and this model is currently under development. Ito said plug-in hybrids were one of several hybrid technologies Honda was planning for its production cars.

Despite Ito’s claims that “there are still some issues that need to be addressed such as range and recharging time”, Honda will still start to launch electric cars in 2012.

The first electric Honda will launch in the US and Japan in 2012 and it would then “further advance [EVs] and accelerate their more widespread introduction to the market in the next 10 years”.

Despite the shift towards electric and hybrid vehicles, the firm still intends to further develop petrol and diesel engines.

A new range of Honda petrol engines with improved performance, consumption and emissions will launch in Europe in 2012 alongside a new range of transmissions.

It is also developing a new smaller diesel engine to sit below its current 2.2-litre unit and this will be launched in Europe in 2012.

Honda still believes its hydrogen fuel cell-powered FCX Clarity “will provide the ultimate mobility” in the future and is working on further technological advancements in this field, along with hydrogen refuelling systems.

Several new models are planned for emerging markets that will also be locally built to improve cost effectiveness. A new sub-£7000 small car will be launched in India next year, while Thailand will also get an “eco-car with an excellent level of fuel economy” in 2011. This model will be exported to other emerging nations, too.

Ito believes this new business model will allow Honda to “strengthen its business in emerging nations” and “strengthen the competitiveness of Honda’s small-size vehicles”.