Honda prices new HR-V small SUV below $20,000

LOS ANGELES -- Honda is entering the hot subcompact SUV segment with a new model that it expects will make it one of the better sellers in its lineup.

The formula is actually pretty simple: a cheap price and high gas mileage along with lots of space inside and the brand's reputation for reliability.

Honda is announcing that its new subcompact SUV, the HR-V, will start at $19,995 including destination charges when it goes on sale nationwide May 15. That puts it within the budgets of a lot of its target customers -- young, urban drivers who carry around friends or a lot of stuff.

With that price, and gas price as good as 28 miles per gallon in the city, 35 mpg on the highway, Honda expects to sell 70,000 HR-Vs a year. If that prediction still doesn't sound bold enough, Honda executives think that more than half of buyers will be new to the brand.

The basic idea was to make as much interior space available inside as possible on a chassis shared with Honda's smallest car model, the Fit. At a hair over 14 feet long, HR-V is a full 10 inches shorter than what had been the smallest Honda SUV, the CR-V.

Yet HR-V has the higher seating position of a SUV and room for four with rear cargo space. Like the Fit, it has a handy flip-up back seat cushion that allows for tall objects to be put behind the front seats --- we were able to stick in a dining-room chair back there -- as well as flip-down rear seat backs that permit it to carry long objects like surfboards or lumber.

HR-V will be powered by a 141-horsepower 1.8-liter four-cylinder engine, which had plenty of pep while driving around town. There's a standard six-speed manual transmission, but the continuously variable transmission, or CVT, for $800 affords better gas mileage -- 3 mpg on average.