Honda Motor Co., which has played second fiddle to Toyota Motor Corp. as a maker of gasoline-electric hybrids, may have found a way to leap ahead of its archrival: a technology capable of making a hybrid Civic to go as much as 65 miles on a gallon of gas, 30% better than the latest Civic hybrid due out later this year.

Engineers at Honda's research and development center near Tokyo said the Japanese auto maker has made substantial progress in commercializing a technology automotive engineers call "homogenous-charge compression-ignition," or HCCI, that can further enhance the fuel economy of a typical gasoline internal combustion engine -- a hot topic in automotive research labs world-wide.

Honda, according to the engineers who spoke on condition of anonymity, is ready to tout results it has made so far and show a "prototype" four-cylinder HCCI engine as early as next year in a meeting with journalists.

Mechanically, an HCCI engine, like a conventional gas engine, sends a finely balanced mixture of air and fuel to the cylinders. In a conventional gas engine, a spark plug ignites the air-fuel mixture to create power. But in an HCCI engine, the air-fuel mixture is compressed by the piston until rising heat inside the chamber ignites the mixture -- a process similar to that used in a diesel engine.

Experts believe vehicles powered by gas HCCI engines could potentially offer the eye-popping fuel economy of a diesel without high emissions of nitrogen oxides and sooty particulates. But standing in the way of an early commercialization of HCCI engines are obstacles that have sidelined the technology since auto makers first began experimenting with it in the 1970s. For one thing, it's extremely difficult to make an HCCI engine run smoothly at very low and extremely high speeds because engineers cannot control the spontaneous combustion in those ranges.

Even though gas combustion engine technology is nearly 100 years old, "the view that there is no more room for further technological advancement is completely wrong," Takeo Fukui, Honda's president and chief executive, told a group of journalists at the company's research center last week. "We will not give it up because (our engineers') efforts continue to make progress."

To make gasoline engines more efficient, Honda last year opened an Advanced Powertrain Research center in Japan to focus on improving internal-combustion technology. The aim is to tap on average as much as 40% to 50% of the thermal power generated by a gasoline engine per unit of fuel through a combination of different technologies such as HCCI -- more than doubling the efficiency of a typical gasoline-powered engine now.

According to the engineers, Honda has been able to clear obstacles to create a prototype four-cylinder HCCI engine that is running smoothly in a low to medium speed range, which they said should represent about 65% of the load range necessary to run a gasoline engine properly on the highway. The main challenge left to clear is high speeds, or above 4,000 RPMs, the engineers said. A typical Honda gasoline-fueled engine covers a range reaching 6,000 RPMs.

A key reason why a solution to evolve gasoline engine technology, such as HCCI, is critical is because the cost differential between a gasoline engine car and a hybrid vehicle still amounts to several thousand dollars. Mr. Fukui said the redesigned Civic hybrid, due to hit dealer showrooms in the U.S. this fall, will likely cost roughly $3,000 more than a comparable gasoline engine Civic. While the gap has shrunken from $4,000, it is "still too expensive" to make hybrids a truly mainstream product, Mr. Fukui said.

By boosting the fuel efficiency of a hybrid by using cutting-edge technology such as HCCI, Mr. Fukui said Honda wants to make sure consumers could more quickly make up for the cost premium of a hybrid as gasoline prices keep going up.

Honda Mulls Rear-Wheel-Drive

Honda is considering making a radical shift to its tradition of favoring front-wheel-drive vehicles for their efficiency in creating more room for drivers and passengers: developing a series of rear-wheel-drive cars.

Individuals familiar with Honda's product plans said the company already has developed a rear-wheel-drive prototype and is weighing the possibility of launching it as the next-generation Acura RL in the U.S. and the Honda Legend in Japan several years down the road.

The move, they said, is part of a continuing effort to regain the youthfulness Honda has lost after years of conservative product planning, particularly with two of its core products, the small Civic car and the medium-size Accord sedan. The rear-wheel-drive Acura RL would be the first of a series of rear-wheel-drive cars from Honda, the individuals said. The latest version of the Acura RL hit dealer showrooms in the U.S. last year.

The individuals said a key force driving Honda to consider developing rear-wheel-drive technology is changing demographics in the U.S. and Japan, two of its biggest markets worldwide. The individuals said baby-boomer generations in both countries are reaching retirement age and have more money to spend, buying more luxury vehicles than ever as a result.

One Honda sales executive said certain BMW and Mercedes brand vehicles are among the top-10 selling vehicles in Japanese metropolitan areas such as Tokyo, Nagoya and Osaka.

Honda is considering bringing to Japan the Acura franchise, Honda's sporty-near-luxury brand in the U.S. market, to take advantage of that trend, the executive said.