The company's R&D boss, Tomohiko Kawanabe, said a smaller diesel is necessary to operate in these markets.
At the moment Honda only has one diesel, a 2.2, which it uses in cars from the Civic, Accord and CR-V.
The company has been spending more and more research funding on further development of its hybrid system, and has just announced one which can be used in its larger cars as ready for development.
Current Honda hybrids are restricted to the Civic and Insight.
