Currently, Honda only has a single diesel engine in its lineup, a 2.2-liter inline four offered in several European-market models including the Accord, Civic and CR-V. With diesel engines still far more popular in Europe than hybrids, Honda is taking a serious look at developing a smaller displacement unit for the continent as well markets like India. Here's how it could go down.
Until late 2008, Honda was planning to introduce the 2.2-liter along with a larger V6 diesel in the U.S. market. The collapse of the U.S. market caused Honda to abandon those plans and instead to switch to development of hybrid systems for larger vehicles like the Odyssey and Accord. If Honda does build a smaller diesel, it will likely be in the 1.2-1.6-liter range for installation in cars like the Fit/Jazz, Civic and City.
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[Source: Automotive News - sub. req'd]