Honda Motor is closer to developing a new hybrid system for larger cars, according to the company’s head of automobile research, Tomohiko Kawanabe.

He told Reuters the project had left the research stage for development and production readiness could be about three years away.

Honda’s current petrol-electric hybrids, the Insight and the upcoming CR-Z sports coupe (the first manula transmission hybrid), use a series hybrid system where the starter/electric motor combination assists the petrol engine but, unlike in Toyota’s parallel hybrid Prius, the electric motor cannot drive the car independently as well. Honda’s system is consequently simpler and cheaper but trails Toyota’s in fuel efficiency.

Honda had originally planned to raise fuel efficiency in its bigger cars by using clean diesel technology but abandoned that strategy – including derferring plans to offer diesel engines in the US – in late 2008. It switched instead to developing a hybrid system for larger cars such as the Odyssey minivan and Pilot SUV.

Although he was not specific on timing, Kawanabe indicated that the new hybrid system would be ready in roughly the same three year time frame it takes Honda on average on develop a new vehicle.

He also told Reuters that Honda was considering developing a small diesel engine, seen as crucial to sell cars in some emerging markets, including India, as well as in Europe.

Currently Honda has only a 2.2 litre diesel engine.