TOKYO -- Since it began knocking together motorbikes at the end of the Second World War, Honda Motor Co. has striven to keep pace with bigger and wealthier auto makers by its creativity and focus on innovative technology.

Now, more than ever, Japan's number-three carmaker says a renewed drive to bring its R&D and production operations closer together are crucial to thriving in an industry where the race to develop unique and fuel-efficient cars has intensified.

"We're at a critical juncture where we have to really fortify the link between r&d and production," said Motoatsu Shiraishi, a senior executive who took over Honda's r&d unit last Friday.

"For example, when hybrid and fuel-cell cars become more common, it won't be enough to come up with a better product at the research level. We have to make it commercially viable when it's mass-produced," he said in a recent interview.

On the research front, Honda ranked eighth in the world in car sales volume, is well ahead of the pack.

In 1999, the maker of the popular Accord saloon released the U.S. market's first gasoline-electric hybrid car; most rivals have yet to offer one. It is also alone with a marketable fuel-cell vehicle that can be driven in freezing temperatures.

But as rivals gear up to bring their next-generation cars to market, Honda expects to face heightened competition. While most of its peers have formed capital and technical ties to speed up development, Honda has, typically, chosen to go it alone.

That independence means Honda can't reap the kind of cost savings that Nissan Motor Co. Ltd. enjoys by buying common parts with partner Renault to take on General Motors, Toyota Motor Corp. and others.

"We are small and weak when it comes to scale. A company like ours has to compete by staying one step ahead of the rest in the field of technology," Shiraishi said, stressing that a closer link between r&d and production was a must.

His posting as president of Honda r&d is a case in point.

The 58-year-old Aichi native has spent all of his 36 Honda years in production engineering. He now replaces Takanobu Ito, who switches to head production at the Suzuka factory, Honda's biggest in Japan.

PLANES, DROIDS AND AUTOMOBILES

For Honda, the r&d field has never been too broad. It famously dabbles in jet engines and humanoid robots, while also conducting research into bio-fuels and solar power, among others.

While Honda has done well business-wise -- it has never posted a loss and is valued at $48 billion, second only to Toyota in the global auto industry -- some critics have wondered whether the quirky carmaker is spreading its resources too thinly.

But insiders point out that Honda's r&d spending is comparable to rivals', at around 5 percent of revenues. More importantly, the outlays yield dividends for its core motorcycle and car making businesses, they say.

As cars become more computerized, the technological know-how gained from developing robots -- such as voice and visual recognition skills -- comes in handy; the aircraft business gives Honda valuable insight into reducing the weight of cars.

That kind of edge and creativity are crucial for Honda, whose car business lacks the broad engine or chassis line-up to compete head on with bigger and deeper-pocketed rivals.

When it comes to creativity, Honda is a trend-setter.

In the early 1990s, with observers wondering when Honda would enter the "one-box" van-type family car segment that was taking Japan by storm, its answer in 1994 was a whole new concept: the Odyssey, which ignited the minivan boom that is still going strong in the world's second-biggest car market.

But being first hasn't always worked to Honda's advantage.

Competitors sometimes followed with similar products at a lower price and with more add-ons.

Kunimichi Odagaki, a senior official at Honda r&d and creator of the Odyssey, says that as an engineer, there's a certain sense of satisfaction from being imitated by a rival.

"But for competition's sake, it's also important to develop something that can't easily be copied," he added.

For Honda, that means building more cars like the Odyssey and fewer like the Stream multi-purpose vehicle, which was quickly outsold by a similar Toyota model.

Judging by Honda's recent creations, the signs are good.

After criticism from some quarters that it was taking too long to enter the soaring U.S. pickup truck market, Honda floored car enthusiasts with the Ridgeline, a vehicle it calls the "sport utility truck" which hit showrooms last month.

On top of having all the towing power of a half-ton truck despite a smaller V-6 engine, the Ridgeline featured innovations such as a lockable trunk in the truck-bed and a tailgate that also swings open to the side -- while keeping to Honda's dictum of only making vehicles that handle like a sporty car.

"Our goal is to come up with concepts that make people say, 'Why didn't anyone think of this before?'," Odagaki said.

"That's what's unique about Honda and that's where our strength lies."

TOKYO -- Honda Motor Co. said on Monday it plans to start mass-producing solar cells in 2007, eyeing growing demand for environmentally friendly energy sources.

Japan's third-biggest automaker said in a statement it would build a new factory for solar cells on the site of a car plant in Kumamoto prefecture, on the southwestern Japanese island of Kyushu.

The company aims to generate annual sales of 5 billion to 8 billion yen ($40 million to $70 million) from solar cells once the factory's output reaches full annual capacity of 27.5 megawatts, enough to power about 8,000 households.

Honda will be competing with major solar cell manufacturers such as Kyocera Corp., Sharp Corp. and Mitsubishi Electric Corp.

A Honda spokeswoman did not say when the factory would hit full capacity and declined to disclose the size of the investment, which the Nihon Keizai business daily estimated would be just short of 10 billion yen.

Honda said its solar cells would be composed of non-silicon compound materials, consuming half as much energy and generating 50 percent less carbon dioxide during production when compared with conventional solar cells made from silicon.

The company aims to sell the solar cells for both residential and industrial use. It will initially target the Japanese market.

Prior to mass production, Honda plans to manufacture and sell solar cells in a limited area in Japan from late 2006.