Watts said that Honda's hybrid efforts would be focused on smaller cars for urban environments while larger cars would use diesel engines. Honda apparently has big plans for the new small dedicated hybrid car that they will be introducing in 2009. Honda is targeting 200,000 annual sales for the new hybrid and hopes that ten percent of U.S. sales will be hybrids by 2010. The company's US sales are expected to hit 1.59 million in 2008. To help their future cars come to market, Honda is building a $424 million research center in Japan to develop alternative drive vehicles like hybrids and fuel cell vehicles.