Honda Motor Co. announced business expansion plans Wednesday that include construction of a new factory in Japan and two more in North America by 2010 to meet increasing demand for its vehicles.

“Overseas sales are expected to expand,” Honda President Takeo Fukui said at a news conference at company headquarters in Tokyo. “We will produce cars where there is demand.”

Fukui also said the company will begin selling a cheaper, new hybrid model aimed at families in 2009.

Honda hopes to sell 200,000 of the new models, including 100,000 in North America, he said.

Honda’s existing hybrid, the Insight, is not selling well and the company appears to be banking on the new model to help it catch up with Toyota Motor Corp., whose Prius is dominating the hybrid market.

Fukui said the new factories are expected help boost the company’s sales to more than 4.5 million units in 2010, up from 3.37 million units in 2005.

Honda plans to build a new plant in Yorii, Saitama Prefecture, which is scheduled to begin production in 2010 and will have an annual capacity of 200,000 cars.

The automaker plans to invest 70 billion yen in the plant and will employ some 2,200 workers there.

Although Fukui did not specify which models the Yorii plant will make, he said it will produce “large” models.

Honda is also expected to build an auto assembly plant somewhere in the United States, and an engine plant next to its auto plant in Alliston, Ontario.

The two plants are expected to begin operation in 2008.

The U.S. factory will cost about $400 million, have an annual production capacity of 200,000 vehicles and create about 1,500 jobs.

Honda plans to invest $140 million in the Canadian plant, which is expected to produce 200,000 engines a year.

In an effort to strengthen its product development, the carmaker will build a new research center in Sakura, Tochigi Prefecture, in 2009 to develop next-generation automobiles. The facility, which is expected to cost 17 billion yen, will have test tracks simulating both highways and city streets.

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