Honda Motor Co.’s R&D staff is being challenged by CEO Takanobu Ito to develop a hybrid that exceeds the fuel economy of the Toyota Prius. The result won’t necessarily be the next-generation version of Honda’s Insight hybrid but perhaps be used in another vehicle in the Honda lineup.

In an interview at the Detroit Auto Show, Ito said that he wants to “develop and expand” its hybrids and that “major sacrifices” were made on shifting people and resources to do so. Honda is prepared to expand its small-vehicle hybrid system to other platforms, but Ito said Honda’s large-vehicle hybrid platform is not ready. As Honda pressures its staff, Toyota is definitely not idle. It unveiled the FT-CH concept, a hybrid hatchback 6 inches shorter than the Prius. It is unconfirmed if the vehicle will reach production. Honda executives were dissatisfied with sales of the Insight since it was launched in the US last March. Although the Insight is cheaper than the Prius by $2,500, the Prius outsold the Insight 139,682 to 20,572 in 2009.