Honda forecasts overall domestic automobile sales to decline by 20,000 units on the year to 635,000 units in fiscal 2011. However, it projects Japanese hybrid vehicle sales will rise to 147,000 units, up 50,000 units from the figure projected for the current fiscal year and representing 23% of overall sales.

Honda plans to launch a new hybrid wagon based on the Fit subcompact in March, expanding the available versions of its top-selling car and complementing the Fit Hybrid launched last month. The new model will feature a wagon-type body that shares an identical front design with the Fit but is roughly 50cm longer. The company also plans to release a hybrid version of the Freed next autumn—its first hybrid minivan.

Honda is due to end domestic sales of the Civic Hybrid shortly, but the release of the Freed hybrid model will increase the company’s hybrid lineup to five, including the CR-Z, as well as the Insight, which is due to receive a major face-lift in July.