Honda believes aggressive pricing of the new Swindon-built Civic, on sale in the UK from January, “will blow Ford Focus out of the water”.

Mark Davis, head of Honda UK's car division, said at the Birmingham motor show the company was using lessons learned in the US and Canada.

“In those markets, we've operated by maintaining our best price at the front end of the market,” said Mr Davis who expected UK 5dr Civic sales to increase from 20,000 to 30,000 next year.

“It's easier for the customer to understand and arguably more honest.” Mr Davis said Honda had decided to go head-to-head with “the big boys” on pricing. The 5dr Civic, on sale in early 2001, will cost £11,995 for the 1.4S.

The range-topping 1.6SE Exec - which includes leather, aircon, CD player and ABS - will be £13,995.