Honda looked to go after Toyota's Prius again with a larger, second generation Insight. However, Honda again ran into a brick wall. Honda managed to undercut the Prius by a few thousand dollars, but also did so with a much smaller vehicle that was not as fast, not as tech-laden, and not nearly as fuel efficient as the third-generation Prius. When it comes to actual vehicle sales, the numbers don't lie. Honda sold roughly 20,500 Insights during 2009 in the U.S. -- Toyota, on the other hand, sold nearly 140,000 Prius hybrids.

"Are we happy with how sales are going? No, we're not happy," said American Honda executive VP John Mendel.

Faced with the prospect of another dud in the hybrid marketplace, Honda chief Takanobu Ito is calling on his engineers to develop a vehicle that will "Out Prius" the Prius according to Automotive News. Ito wants a hybrid that will be able to exceed the stellar fuel economy ratings of Toyota's crown jewel. Toyota's Prius is rated at 50 mpg (city/highway combined) while the smaller Insight is rated at just 41 mpg (city/highway combined).

"We want to develop and expand our hybrids," said Ito earlier this month in Detroit. "We made some major sacrifices to shift people and resources to do that."

While Honda looks like it will have its hands full developing a vehicle to topple the Prius, it has also just launched a new "sporty" hybrid aimed at enthusiasts. The CR-Z can be had with a manual transmission, but fuel economy junkies should be warned -- choosing to the manual will result in a serious hit to city fuel economy. A CR-Z equipped with a continuously variable transmission (CVT) will be rated at 36/38 mpg (city/highway). Opting for the six-speed manual transmission, however, will cut those numbers to 31/37 mpg.

For comparison, a Mini Cooper (six-speed manual) gets 28/37 mpg without the need for hybrid components.