On paper, Michio Shinohara has few reasons to be cheerful. He works in the car business, the manufacturing sector hardest hit by the downturn. His company, Honda, halted production at its Swindon plant for four months this year and ditched plans for a sexy new NSX sports car. It pulled out of Formula One, only to see its driver, Jenson Button, win race after race for his new team, Brawn.

Yet on a muggy afternoon in Tokyo last month, Shinohara threw back his head and laughed: “It seems that we have been incredibly brilliant.”

The car he launched in February, the petrol-electric Insight, stole the title of best-selling hybrid in Japan from Toyota’s Prius and became Japan’s top-selling vehicle overall in April, the first time a hybrid had topped national sales rankings. More than 1,000 have been sold in Britain, and 5,000 across Europe.

The Insight is so popular that Shinohara, Honda’s head of environment planning, can’t get one himself. “The factory can’t make enough for the orders we already have.”

Petrolheads may mock the Insight’s basic interior and the anaemic performance of its small petrol and electric motors, but Shinohara’s creation is proving to be an ideal product for its time. It’s cheap and green, two qualities car buyers prize more than ever.

“We launched this vehicle at a very lucky time,” he said. “It was not important to us to have the car with top performance. We wanted an eco-friendly car that is accessible to the greatest number of people. Price is key.”

The Insight costs up to 18% less than the Prius, its main rival, and returns similar fuel economy of about 60mpg but the Prius has lower carbon emissions.

Shinohara’s excitement is matched by a sense of relief. The Insight is a car that simply had to work. Although Honda led the way with hybrids — it launched the first, also called Insight, in the late 1990s — it quickly fell behind Toyota. Gawky styling — it looked like an upside-down bathtub — killed the first Insight. A hybrid Accord followed but it failed to sell and was soon scrapped. The hybrid Civic has been a moderate success but Toyota has become the de facto green car brand, thanks to the Prius.

Buoyed by the success of the Insight, Shinohara is leading Honda’s new push into the hybrid market. Next will be a sports car, the CR-Z, due to go on sale next year. New hybrid versions of the Civic and the Jazz will follow.

In a decade, Honda expects to follow Toyota and become the second car company to have a hybrid version of all its models. On sales, however, Honda has fallen so far behind Toyota that it cannot hope to match its rival soon. It expects to sell 250,000 hybrids a year by 2015 and double that by 2020, more than 10% of its current total output. Toyota already sells 400,000 Priuses a year and that figure is expected to rise with the release of new models, including a plug-in version that will extend the car’s electric-only range.

Given the Insight’s success, you would expect Shinohara to be an evangelist for hybrid technology. He regards it, though, as a sticking plaster solution until someone — he hopes it will be him — perfects the hydrogen fuel cell car.

Honda is working up the technology in the FCX Clarity and as Shinohara drove the car around Tokyo, he explained why it, not the Insight, is the future.

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